Property Law Midterms Coverage

Table of Contents
1. LEUNG YEE VS. STRONG MACHINERY (37 PHIL 644) ........................................................................................3

2. ANTONIO PUNZALAN ET. AL. VS. REMEDIOS LACSAMANA (GR NO. L-55729) .................................................4
3. STANDARD OIL CO. VS. JARANILLO (44 PHIL 631) ............................................................................................5
4. DAVAO SAWMILL CO. VS. CASTILLO (61 PHIL 709) ...........................................................................................5
5. BOARD OF ASSESSMENT APPEALS VS. MANILA ELECTRIC (10 SCRA 68) ..........................................................6
6. MAKATI LEASING AND FINANCE CORP. VS. WEAREVER TEXTILE MILLS, INC. (22 SCRA 296)...........................7
7. MINDANAO BUS COMPANY VS. CITY ASSESSOR (116 PHIL 501) ......................................................................8
8. CALTEX PHILIPPINES INC. VS. CENTRAL BOARD OF ASSESSMENT APPEALS AND CITY ASSESSOR OF PASAY
(GR NO. L-50466) ........................................................................................................................................................9
9. SERG’S PRODCUTS, INC. AND SERGIO T. GOQUIOLAY VS. PCI LEASING AND FINANCE, INC. (GR NO. 137705)
11
10. TUMALAD VS. VICENCIO (GR NO. L-30173) ................................................................................................... 12
11. PASTOR D. AGO VS. THE HON. COURT OF APPEALS (GR NO. L-17898) ......................................................... 12
12. THE UNITED STATES VS. IGNACIO CARLOS (GR NO. 6295) ............................................................................ 14
13. LUIS MARCOS LAUREL VS. HON. ZEUS ABROGAR (GR NO. 155076).............................................................. 15
14. MUNICIPALITY OF CAVITE VS. ROJAS (30 PHIL 20) ........................................................................................ 16
15. MANECLANG VS. IAC (144 SCRA 553) ............................................................................................................ 17
16. IGNACIO VS. DIRECTOR OF LANDS (108 PHIL 335) ........................................................................................ 18
17. MACASIANO VS. DIOKNO (GR NO. 97764) .................................................................................................... 21
18. CEBU OXYGEN & ACETYLENE CO., INC. VS. BERCILLES (GR NO. L-40474) ..................................................... 24
19. LAUREL VS. GARCIA (GR NO. 92013) ............................................................................................................. 25
20. MANILA INTERNATIONAL AIRPORT AUTHORITY VS. COURT OF APPEALS, ET. AL. (GR NO. 155650) ............ 26
21. PHILIPPINE PORTS AUTHORITY VS. CITY OF ILOILO (GR NO. 109791) ........................................................... 33
22. PHILIPPINE FISHERIES DEVELOPMENT AUTHORITY VS. CA (GR NO. 169836) ............................................... 35
23. IDEALS VS. PSALM (GR NO. 192088).............................................................................................................. 39
24. WOODRIDGE SCHOOL, INC. ET. AL. VS. ARB CONSTRUCTION INC. (GR NO. 157285) ................................... 41
25. THE CITY OF ANGELES, ET. AL. VS. COURT OF APPEALS (GR NO. 97882) ...................................................... 43
26. FRANCISCO CHAVEZ VS. PUBLIC ESTATES AUTHORITY (GR NO. 133250)...................................................... 45
27. FRANCISCO CHAVEZ VS. NATIONAL HOUSING AUTHORITY (GR NO. 164527) .............................................. 47
28. ESTATE OF YUJUICO VS. REPUBLIC (GR NO. 168661) .................................................................................... 49
1 PROPERTY - CASE DIGESTS

29. LAND BANK OF THE PHILIPPINES VS. REPUBLIC (GR NO. 150824) ................................................................ 50
30. HEIRS OF MARIO MALABANAN VS. REPUBLIC (GR NO. 179987) ................................................................... 52
31. DENR, ET. AL. VS. MAYOR YAP, ET. AL. (GR NO. 167707) .............................................................................. 54
32. VDA. TE TAN TOCO VS. MUNICIPAL COUNCIL OF ILOILO (49 PHIL 52) .......................................................... 56
33. PASAY CITY GOVERNMENT VS. CFI (GR NO. L-32162) ................................................................................... 57
34. ESPIRITU VS. MUNICIPAL COUNCIL OF POZORRUBIO (102 PHIL 867) ........................................................... 58
35. PROVINCE OF ZAMBOANGA DEL NORTE VS. CITY OF ZAMBOANGA (GR NO. L-24440)................................ 59
36. SALAS VS. JARENCIO (46 SCRA 734)............................................................................................................... 61
37. MANILA LODGE NO. 761 VS. COURT OF APPEALS (73 SCRA 162) ................................................................. 63
38. COMMISSIONER OF PUBLIC HIGHWAYS, ET. AL. VS. LOURDES SAN DIEGO, ET. AL. (GR NO. L-30098) ........ 64
39. PHILIPPINE NATIONAL BANK VS. HON. JUDGE JAVIER PABALAN (GR NO. L-33112) ..................................... 65
40. PROFESSIONAL VIDEO INC. VS. TESDA (GR NO. 155504) .............................................................................. 66
41. VILLA VS. HEIRS OF ALTAVAS (GR NO. 162028) ............................................................................................. 66
42. ESTATE OF SOLEDED MANANTAN VS. ANICETO SOMERA (GR NO. 145867) ................................................ 68
43. IGLESIA NI CRISTO VS. HON. PONFERRADA (GR NO. 168943) ....................................................................... 69
44. ROMAN CATHOLIC ARCHBISHOP OF MANILA, ET. AL. VS. COURT OF APPEALS (GR NO. 77425) .................. 71
45. GERMAN MANAGEMENT & SERVICES, INC. VS. HON. COURT OF APPEALS (GR NO. 76216) ........................ 72
46. AIR TRANSPORTATION OFFICE AND MACTAN-CEBU INTERNATIONAL AIRPORT VS. ANTIONIO GOPUCO (GR
NO. 158563)............................................................................................................................................................. 73
47. HEIRS OF MORENO VS. MCIAA (GR NO. 156273) .......................................................................................... 74
48. MACTAN-CEBU INTERNATIONAL AIRPORT AUTHORITY VS. LOZADA, ET. AL. (GR NO. 176625) ................... 76
49. APO FRUITS CORPORATION VS. COURT OF APPEALS (GR NO. 164195) ........................................................ 77
50. CITY OF MANILA, ET. AL. VS. HON. LAGUIO, ET. AL. (GR NO. 118127) .......................................................... 78
51. NATIONAL POWER CORPORATION VS. LUCMAN IBRAHIM (GR NO. 168732)............................................... 81
52. REPUBLIC VS. HON. COURT OF APPEALS AND JOSE DE LA ROSA (GR NO. L-43938) ..................................... 82
53. RIOSA VS. VERZOSA (26 PHIL 86) ................................................................................................................... 83
54. VELASCO VS. ROSENBERG (32 PHIL 72) ......................................................................................................... 84
55. SARMIENTO VS. AGANA (129 SCRA 122) ....................................................................................................... 85
56. BALUCANAG VS. JUDGE FRANCISCO (GR NO. L-34199) ................................................................................ 86
57. FLOREZA VS. EVANGELISTA (96 SCRA 130) .................................................................................................... 87
58. FILIPINAS COLLEGES, INC. VS. TIMBANG (GR NO. L-12812) .......................................................................... 89
59. PNB VS. DE JESUS (GR NO. 149295)............................................................................................................... 90

60. PARILLA, ET. AL. VS. PILAR (GR NO. 167680) ................................................................................................. 91
61. ISMAEL MACASAET, ET. AL. VS. SPOUSES MACASAET (GR NOS. 154391-92) ............................................... 92
62. KILARIO VS. COURT OF APPEALS (GR NO. 134329) ....................................................................................... 96
63. IGNACIO VS. DIRECTOR OF LANDS AND VALERIANO (GR NO. L-12958)........................................................ 97
64. DE BUYSER VS. DIRECTOR OF LANDS, ET. AL. (GR NO. L-22763) ................................................................... 97
65. GRANDE, ET. AL. VS. HON. COURT OF APPEALS (GR NO. L-17652) ............................................................... 99
66. REPUBLIC VS. COURT OF APPEALS, ET. AL. (GR NO. 61647) .......................................................................... 99
67. DIONESIA BAGAIPO VS. COURT OF APPEALS (GR NO. 116290)................................................................... 100
68. SPOUSES BAES VS. COURT OF APPEALS AND REPUBLIC (GR NO. 108065).................................................. 101
69. MARIO RONQUILLO VS. COURT OF APPEALS, ET. AL. (GR NO. 43346)........................................................ 103
70. SIARY VALLEY ESTATES, INC. VS. LUCASAN AND HON. JUDGE ORTEGA (OCTOBER 31, 1957) .................... 105
71. GALLAR VS. HUSAIN (GR NO. L-20954) ........................................................................................................ 106
72. CORONEL VS. INTERMEDIATE APPELLATE COURT (GR NO. L-70191) .......................................................... 106
73. CARAGAY-LAYNO VS. COURT OF APPEALS (GR NO. 52064) ........................................................................ 107
74. ANASTACIA VDA. DE AVILES, ET. AL. VS. COURT OF APPEALS AND CAMILO AVILES ( GR. NO. 95748)....... 109
75. AZNAR BROTHERS REALTY COMPANY VS. AYING (458 SCRA 495) .............................................................. 110
1. LEUNG YEE VS. STRONG MACHINERY (37 PHIL 644)

Facts:
The "Compañia Agricola Filipina" (CAF) bought a rice-cleaning machinery from the defendant machinery
company, and executed a chattel mortgage including the building of strong materials in which the machinery
was installed to secure payment, without any reference to the land on which it stood. The Chattel was
foreclosed due to non-payment and the machinery, including the building, was sold by the sheriff which was
bought by Strong Machinery. The said sale was annotated in the same registry on December 29, 1913. Later
on, CAF sold the lot where the building stood to Strong Machinery thru a deed of sale which was executed
in a public document but was not registered. Strong Machine took possession of the building and the land.
Leung Yee, another creditor of CAF, bought the same building where the machines were installed and
registered in the land registry of the Province of Cavite.
Issue: Was the property's nature changed by its registration in the Chattel Mortgage Registry?

Held:
Where the interest conveyed is of the nature of real property, the placing of the document on record in the
Chattel Mortgage Registry is a futile act.
Chattel Mortgage refers to the mortgage of Personal Property executed in the manner and form prescribed
in the statute.
The building of strong materials in which the rice-cleaning machinery was installed by the "Compañia
Agricola Filipina" was real property, and the mere fact that the parties seem to have dealt with it separate
and apart from the land on which it stood in no wise changed its character as real property. It follows that
neither the original registry in the chattel mortgage registry of the instrument purporting to be a chattel
mortgage of the building and the machinery installed therein, nor the annotation in that registry of the sale
of the mortgaged property, had any effect whatever so far as the building was concerned.
2. ANTONIO PUNZALAN ET. AL. VS. REMEDIOS LACSAMANA (GR NO. L-55729)
FACTS: It appears that petitioner, Antonio Punsalan, Jr., was the former registered owner of a parcel of land
consisting of 340 square meters situated in Bamban, Tarlac. In 1963, petitioner mortgaged said land to
respondent PNB (Tarlac Branch) in the amount of P10,000.00, but for failure to pay said amount, the
property was foreclosed on December 16, 1970. Respondent PNB (Tarlac Branch) was the highest bidder in
said foreclosure proceedings. However, the bank secured title thereto only on December 14, 1977.
In the meantime, in 1974, while the properly was still in the alleged possession of petitioner and with the
alleged acquiescence of respondent PNB (Tarlac Branch), and upon securing a permit from the Municipal
Mayor, petitioner constructed a warehouse on said property. Petitioner declared said warehouse for tax
purposes for which he was issued Tax Declaration No. 5619. Petitioner then leased the warehouse to one
Hermogenes Sibal for a period of 10 years starting January 1975.
On July 26, 1978, a Deed of Sale was executed between respondent PNB (Tarlac Branch) and respondent
Lacsamana over the property. This contract was amended on July 31, 1978, particularly to include in the
sale, the building and improvement thereon.
On November 22, 1979, petitioner commenced suit for "Annulment of Deed of Sale with Damages" against
herein respondents PNB and Lacsamana before respondent Court of First Instance of Rizal, Branch XXXI,
Quezon City, essentially impugning the validity of the sale of the building as embodied in the Amended Deed
of Sale.
On March 14, 1980, respondent PNB filed a Motion to Dismiss on the ground that venue was improperly
laid considering that the building was real property under article 415 (1) of the New Civil Code and therefore
section 2(a) of Rule 4 should apply. 4
Opposing said Motion to Dismiss, petitioner contended that the action for annulment of deed of sale with
damages is in the nature of a personal action, which seeks to recover not the title nor possession of the
property but to compel payment of damages, which is not an action affecting title to real property. On April
25, 1980, respondent Court granted respondent PNB's Motion to Dismiss.
ISSUE: WON the building was real property under article 415 (1) of the New Civil Code and WON related
case should be dismissed on the ground of improper venue
HELD: We affirm respondent Court's Order denying the setting for pre-trial.
The warehouse claimed to be owned by petitioner is an immovable or real property as provided in article
415(l) of the Civil Code. Buildings are always immovable under the Code. A building treated separately from
the land on which it stood is immovable property and the mere fact that the parties to a contract seem to
have dealt with it separate and apart from the land on which it stood in no wise changed its character as
immovable property.
While it is true that petitioner does not directly seek the recovery of title or possession of the property in
question, his action for annulment of sale and his claim for damages are closely intertwined with the issue
of ownership of the building which, under the law, is considered immovable property, the recovery of which
is petitioner's primary objective. The prevalent doctrine is that an action for the annulment or rescission of
a sale of real property does not operate to efface the fundamental and prime objective and nature of the
case, which is to recover said real property. It is a real action. 9
Respondent Court, therefore, did not err in dismissing the case on the ground of improper venue (Section
2, Rule 4) 10, which was timely raised (Section 1, Rule 16).
3. STANDARD OIL CO. VS. JARANILLO (44 PHIL 631)
Facts: On 27 November 1922, Gervasia de la Rosa Vda. de Vera was the lessee of a parcel of land situated
in the City of Manila and owner of the house of strong materials built thereon, upon which date she
executed a document in the form of a chattel mortgage, purporting to convey to Standard Oil Company of
New York by way of mortgage both the leasehold interest in said lot and the building which stands thereon.
After said document had been duly acknowledged and delivered, Standard Oil caused the same to be
presented to Joaquin Jaramillo, as register of deeds of the City of Manila, for the purpose of having the same
recorded in the book of record of chattel mortgages. Upon examination of the instrument, Jaramillo opined
that it was not chattel mortgage, for the reason that the interest therein mortgaged did not appear to be
personal property, within the meaning of the Chattel Mortgage Law, and registration was refused on this
ground only.
A petition for mandamus was filed against the register of deeds. The Supreme Court ruled that the
position taken by the register of deeds is untenable. It is his duty to accept the proper fee and place the
instrument on record. The Court explained that "the duties of a register of deeds in respect to the
registration of chattel mortgages are of a purely ministerial character, and no provision of law can be cited
which confers upon him any judicial or quasi-judicial power to determine the nature of any document of
which registration is sought as a chattel mortgage."
4. DAVAO SAWMILL CO. VS. CASTILLO (61 PHIL 709)
Facts:
Davao Saw Mill Co., Inc., is the holder of a lumber concession from the Government of the Philippine Islands.
However, the land upon which the business was conducted belonged to another person. On the land the
sawmill company erected a building which housed the machinery used by it. Some of the implements thus
used were clearly personal property, the conflict concerning machines which were placed and mounted on
foundations of cement. In the contract of lease between the sawmill company and the owner of the land
there appeared the following provision: That on the expiration of the period agreed upon, all the
improvements and buildings introduced and erected by the party of the second part shall pass to the

exclusive ownership of the lessor without any obligation on its part to pay any amount for said
improvements and buildings; which do not include the machineries and accessories in the improvements.
In another action wherein the Davao Light & Power Co., Inc., was the plaintiff and the Davao, Saw, Mill Co.,
Inc., was the defendant, a judgment was rendered in favor of the plaintiff in that action against the
defendant; a writ of execution issued thereon, and the properties now in question were levied upon as
personalty by the sheriff. No third party claim was filed for such properties at the time of the sales thereof
as is borne out by the record made by the plaintiff herein.
It must be noted also that on number of occasion, Davao Sawmill treated the machinery as personal
property by executing chattel mortgages in favor of third persons. One of such is the appellee by assignment
from the original mortgages.
The lower court rendered decision in favor of the defendants herein. Hence, this instant appeal.
Issue:
WON the machineries and equipments were personal in nature.
Held:
Yes. The Supreme Court affirmed the decision of the lower court. It said machinery which is movable in its
nature only becomes immobilized when placed in a plant by the owner of the property or plant, but not
when so placed by a tenant, a usufructuary, or any person having only a temporary right, unless such person
acted as the agent of the owner.
5. BOARD OF ASSESSMENT APPEALS VS. MANILA ELECTRIC (10 SCRA 68)
FACTS:
On October 20, 1902, the Philippine Commission enacted Act No. 484 which authorized the Municipal Board
of Manila to grant a franchise to construct, maintain and operate an electric street railway and electric light,
heat and power system in the City of Manila and its suburbs to the person or persons making the most
favorable bid. Charles M. Swift was awarded the franchise on March 1903, the terms and conditions of
which were embodied in Ordinance No. 44 approved on March 24, 1903. Respondent MERALCO became
the transferee and owner of the franchise.
MERALCO's electric power is generated by its hydro-electric plant located at Botocan Falls, Laguna and is
transmitted to the City of Manila by means of electric transmission wires, running from the province of
Laguna to the said City. These electric transmission wires which carry high voltage current, are fastened to
insulators attached on steel towers constructed by respondent at intervals, from its hydro-electric plant in
the province of Laguna to the City of Manila. The respondent Meralco has constructed 40 of these steel
towers within Quezon City, on land belonging to it.
On November 15, 1955, petitioner City Assessor of Quezon City declared the steel towers for real property
tax. After denying respondent's petition to cancel the tax declarations, an appeal was taken by respondent
to the Board of Assessment Appeals of Quezon City, which required respondent to pay the amount of
P11,651.86 as real property tax on the steel towers for the years 1952 to 1956. Respondent paid the amount
under protest, and filed a petition for review with the Court of Tax Appeals (CTA). The CTA then rendered a
decision on December 29, 1958, ordering the cancellation of the tax declarations and the petitioner City

Treasurer of Quezon City to refund to the respondent the sum of P11,651.86 stating that the steel towers
are personal properties not subject to real property tax. The motion for reconsideration having been denied,
the instant petition for review was filed.
ISSUE(S):
Whether or not the steel bars come in purview of real properties subject to real property tax.
RULING:
The Court in upholding the assailed decision referred to Article 415 of the Civil Code for the definition of an
immovable property, as such was not provided in the tax law. According to Article 415, the following are
immovable property: "(1) Land, buildings, roads, and constructions of all kinds adhered to the soil; xxx xxx
xxx (3) Everything attached to an immovable in a fixed manner, in such a way that it cannot be separated
therefrom without breaking the material or deterioration of the object; xxx xxx xxx (5) Machinery,
receptacles, instruments or implements intended by the owner of the tenement for an industry or works
which may be carried in a building or on a piece of land, and which tends directly to meet the needs of the
said industry or works;" xxx xxx xxx
It was held that the steel towers or supports in question, do not come within the objects mentioned in
paragraph 1, because they do not constitute buildings or constructions adhered to the soil. They are not
constructions analogous to buildings nor adhering to the soil. As per description, given by the lower court,
they are removable and merely attached to a square metal frame by means of bolts, which when unscrewed
could easily be dismantled and moved from place to place. They cannot be included under paragraph 3, as
they are not attached to an immovable in a fixed manner, and they can be separated without breaking the
material or causing deterioration upon the object to which they are attached. Each of the steel towers or
supports consists of steel bars or metal strips, joined together by means of bolts, which can be disassembled
by unscrewing the bolts and reassembled by screwing the same. Also, the steel towers or supports do not
fall under paragraph 5, for they are not machineries or receptacles, instruments or implements, and even if
they were, they are not intended for industry or works on the land as the petitioner is not engaged in an
industry or works on the land in which the steel supports or towers are constructed.
6. MAKATI LEASING AND FINANCE CORP. VS. WEAREVER TEXTILE MILLS, INC. (22 SCRA 296)
Facts:
It appears that in order to obtain financial accommodations from herein petitioner Makati Leasing and
Finance Corporation, the private respondent Wearever Textile Mills, Inc., discounted and assigned several
receivables with the former under a Receivable Purchase Agreement. To secure the collection of the
receivables assigned, private respondent executed a Chattel Mortgage over certain raw materials inventory
as well as a machinery described as an Artos Aero Dryer Stentering Range.
Upon default, Makati Leasing filed a petition for judicial foreclosure of the properties mortgaged. Acting on
Makati Leasing’s application for replevin, the lower court issued a writ of seizure. Pursuant thereto, the
sheriff enforcing the seizure order seized the machinery subject matter of the mortgage. In a petition for
certiorari and prohibition, the Court of Appeals ordered the return of the machinery on the ground that the
same can-not be the subject of replevin because it is a real property pursuant to Article 415 of the new Civil
Code, the same being attached to the ground by means of bolts and the only way to remove it from
Wearever textile’s plant would be to drill out or destroy the concrete floor. When the motion for
reconsideration of Makati Leasing was denied by the Court of Appeals, Makati Leasing elevated the matter
to the Supreme Court.
Issue:
Whether or not the machinery in suit is real or personal property from the point of view of the parties.
Held:
It is similar to that of the Tumalad v Vicencio case. If a house of strong materials, like what was involved in
the Tumalad case, may be considered as personal property for purposes of executing a chattel mortgage
thereon as long as the parties to the contract so agree and no innocent third party will be prejudiced
thereby, there is absolutely no reason why a machinery, which is movable in its nature and becomes
immobilized only by destination or purpose, may not be likewise treated as such. This is really because one
who has so agreed is estopped from the denying the existence of the chattel mortgage.
In rejecting petitioner’s assertion on the applicability of the Tumalad doctrine, the CA lays stress on the fact
that the house involved therein was built on a land that did not belong to the owner of such house. But the
law makes no distinction with respect to the ownership of the land on which the house is built and we
should not lay down distinctions not contemplated by law.
It must be pointed out that the characterization by the private respondent is indicative of the intention and
impresses upon the property the character determined by the parties. As stated in Standard Oil Co. of New
York v. Jaramillo, 44 Phil. 630, it is undeniable that the parties to a contract may, by agreement, treat as
personal property that which by nature would be a real property as long as no interest of third parties would
be prejudiced thereby.
The status of the subject matter as movable or immovable property was not raised as an issue before the
lower court and the CA, except in a supplemental memorandum in support of the petition filed in the
appellate court. There is no record showing that the mortgage has been annulled, or that steps were taken
to nullify the same. On the other hand, respondent has benefited from the said contract.
Equity dictates that one should not benefit at the expense of another.
As such, private respondent could no longer be allowed to impugn the efficacy of the chattel mortgage after
it has benefited therefrom.
Therefore, the questioned machinery should be considered as personal property.
7. MINDANAO BUS COMPANY VS. CITY ASSESSOR (116 PHIL 501)
Facts:
• Mindanao Bus Company is a public utility engaged in transporting passengers and cargoes by motor trucks
in Mindanao Island;
• City Assessor of Cagayan assessed the machineries of the respondent, which are either sitting on cement
or wooden platforms, as real properties for P4,400. Petitioner is the owner of the land where it operates
and garage for its buses, a repair shop; blacksmith and carpentry shops where the buses are made; body

constructed and repaired for it to be serviceable. The said machines were never used as industrial
equipments to produce finished products for sale or offered to the general public for business.
Issue:
• WON the Honorable Court of tax Appeals erred in upholding respondents’ contention that the questioned
assessment are valid; and that the said tools, equipments or machineries are immovable taxable real
properties;
Held:
• Respondents contend that said equipments, though movable, are immobilized by destination, in
accordance with paragraph 5 of Article 415 of the New Civil Code which provides:
Art. 415. — The following are immovable properties:
xxx xxx xxx
(5) Machinery, receptacles, instruments or implements intended by the owner of the tenement for an
industry or works which may be carried on in a building or on a piece of land, and which tend directly to
meet the needs of the said industry or works. (Emphasis ours.)
• Note that the stipulation expressly states that the equipments are placed on wooden or cement platforms.
They can be moved around and about in petitioner's repair shop. The tools and equipments in question in
this instant case are, by their nature, not essential and principle municipal elements of petitioner's business
of transporting passengers and cargoes by motor trucks. They are merely incidentals — acquired as
movables and used only for expediency to facilitate and/or improve its service. Even without such tools and
equipments, its business may be carried on, as petitioner has carried on, without such equipments, before
the war. The transportation business could be carried on without the repair or service shop if its rolling
equipment is repaired or serviced in another shop belonging to another.
• The case at bar, the equipments in question are destined only to repair or service the transportation
business, which is not carried on in a building or permanently on a piece of land, as demanded by the law.
Said equipments may not, therefore, be deemed real property.
• We hold that the equipments in question are not absolutely essential to the petitioner's transportation
business, and petitioner's business is not carried on in a building, tenement or on a specified land, so said
equipment may not be considered real estate within the meaning of Article 415 (c) of the Civil Code.
8. CALTEX PHILIPPINES INC. VS. CENTRAL BOARD OF ASSESSMENT APPEALS AND CITY ASSESSOR OF PASAY
(GR NO. L-50466)
FACTS: This case is about the realty tax on machinery and equipment installed by Caltex (Philippines) Inc. in
its gas stations located on leased land.
The machines and equipment consists of underground tanks, elevated tank, elevated water tanks, water
tanks, gasoline pumps, computing pumps, water pumps, car washer, car hoists, truck hoists, air compressors
and tireflators.
The said machines and equipment are loaned by Caltex to gas station operators under an appropriate lease
agreement or receipt. It is stipulated in the lease contract that the operators, upon demand, shall return to
Caltex the machines and equipment in good condition as when received, ordinary wear and tear excepted.

The lessor of the land, where the gas station is located, does not become the owner of the machines and
equipment installed therein. Caltex retains the ownership thereof during the term of the lease.
The city assessor of Pasay City characterized the said items of gas station equipment and machinery as
taxable realty. The realty tax on said equipment amounts to P4,541.10 annually (p. 52, Rollo). The city board
of tax appeals ruled that they are personalty. The assessor appealed to the Central Board of Assessment
Appeals.
ISSUE:
1. Whether the pieces of gas station equipment and machinery already enumerated are subject to realty
tax
2. Distinguish from the various applications of Art 415
HELD:
1. This issue has to be resolved primarily under the provisions of the Assessment Law and the Real Property
Tax Code.
Section 2 of the Assessment Law provides that the realty tax is due "on real property, including land,
buildings, machinery, and other improvements" not specifically exempted in section 3 thereof. The Code
contains the following definitions in its section 3:
k) Improvements — is a valuable addition made to property or an amelioration in its condition, amounting
to more than mere repairs or replacement of waste, costing labor or capital and intended to enhance its
value, beauty or utility or to adapt it for new or further purposes.
m) Machinery — shall embrace machines, mechanical contrivances, instruments, appliances and apparatus
attached to the real estate. It includes the physical facilities available for production, as well as the
installations and appurtenant service facilities, together with all other equipment designed for or essential
to its manufacturing, industrial or agricultural purposes (See sec. 3[f], Assessment Law).
We hold that the said equipment and machinery, as appurtenances to the gas station building or shed
owned by Caltex (as to which it is subject to realty tax) and which fixtures are necessary to the operation of
the gas station, for without them the gas station would be useless, and which have been attached or affixed
permanently to the gas station site or embedded therein, are taxable improvements and machinery within
the meaning of the Assessment Law and the Real Property Tax Code.
2. Caltex invokes the rule that machinery which is movable in its nature only becomes immobilized when
placed in a plant by the owner of the property or plant but not when so placed by a tenant, a usufructuary,
or any person having only a temporary right, unless such person acted as the agent of the owner (Davao
Saw Mill Co. vs. Castillo, 61 Phil 709).
That ruling is an interpretation of paragraph 5 of article 415 of the Civil Code regarding machinery that
becomes real property by destination. In the Davao Saw Mills case the question was whether the machinery
mounted on foundations of cement and installed by the lessee on leased land should be regarded as real
property forpurposes of execution of a judgment against the lessee. The sheriff treated the machinery as
personal property. This Court sustained the sheriff's action. (Compare with Machinery & Engineering
Supplies, Inc. vs. Court of Appeals, 96 Phil. 70, where in a replevin case machinery was treated as realty).

Here, the question is whether the gas station equipment and machinery permanently affixed by Caltex to
its gas station and pavement (which are indubitably taxable realty) should be subject to the realty tax. This
question is different from the issue raised in the Davao Saw Mill case.
Improvements on land are commonly taxed as realty even though for some purposes they might be
considered personalty (84 C.J.S. 181-2, Notes 40 and 41). "It is a familiar phenomenon to see things classed
as real property for purposes of taxation which on general principle might be considered personal property"
(Standard Oil Co. of New York vs. Jaramillo, 44 Phil. 630, 633).
This case is also easily distinguishable from Board of Assessment Appeals vs. Manila Electric Co., 119 Phil.
328, where Meralco's steel towers were considered poles within the meaning of paragraph 9 of its franchise
which exempts its poles from taxation. The steel towers were considered personalty because they were
attached to square metal frames by means of bolts and could be moved from place to place when
unscrewed and dismantled.
Nor are Caltex's gas station equipment and machinery the same as tools and equipment in the repair shop
of a bus company which were held to be personal property not subject to realty tax (Mindanao Bus Co. vs.
City Assessor, 116 Phil. 501).
The Central Board of Assessment Appeals did not commit a grave abuse of discretion in upholding the city
assessor's is imposition of the realty tax on Caltex's gas station and equipment.
ATTY: it seems that the only time you can be exempt from Art. 415 (in Davao Sawmill) or the Tax Code (in
Caltex) is to defend that the materials are not essential to your industry (in Mindanao Bus Co).
9. SERG’S PRODCUTS, INC. AND SERGIO T. GOQUIOLAY VS. PCI LEASING AND FINANCE, INC. (GR NO. 137705)
Facts: Serg's Products, Inc. (SPI) and PCI Leasing & Finance, Inc. entered into a lease agreement providing
that the machines in question were to be considered as personal property, although the same were essential
and principal elements in the chocolate-making business of SPI.
Subsequently, PCI filed a complaint against SPI for sum of money, with an application for a writ of
replevin. The sheriff then proceeded to seize the machines in question. SPI contended that the subject
machines used in their factory were not proper subjects of the writ of replevin because they were in fact
real property having become immobilized by destination.
SPI went to the Court of Appeals via an original action for certiorari. the Court of Appeals, however,
sustained the writ and held that the machines were personal property. Thus, SPI appealed to the Supreme
Court.
Issue: Whether the said machines are personal, not immovable, property which may be a proper subject of
a writ of replevin
Held: The Court has held that contracting parties may validly stipulate that a real property be considered as
personal. After agreeing to such stipulation, they are consequently estopped from claiming otherwise.
Under the principle of estoppel, a party to a contract is ordinarily precluded from denying the truth of any
material fact found therein.
In the present case, the Lease Agreement clearly provides that the machines in question are to be
considered as personal property. Specifically, Section 12.1 of the Agreement reads as follows:
“12.1 The PROPERTY is, and shall at all times be and remain, personal property notwithstanding that the
PROPERTY or any part thereof may now be, or hereafter become, in any manner affixed or attached to or
embedded in, or permanently resting upon, real property or any building thereon, or attached in any
manner to what is permanent.”
Clearly then, petitioners are estopped from denying the characterization of the subject machines as
personal property. Under the circumstances, they are proper subjects of the Writ of Seizure.
It should be stressed, however, that our holding — that the machines should be deemed personal
property pursuant to the Lease Agreement – is good only insofar as the contracting parties are concerned.
Hence, while the parties are bound by the Agreement, third persons acting in good faith are not affected by
its stipulation characterizing the subject machinery as personal. In any event, there is no showing that any
specific third party would be adversely affected.
10. TUMALAD VS. VICENCIO (GR NO. L-30173)
Facts:
On 1 September 1955 defendants-appellants executed a chattel mortgage in favor of plaintiffs-appellees
over their house of strong materials located at No. 550 Int. 3, Quezon Boulevard, Quiapo, Manila, over Lot
No. 6-B and 7-B, Block No. 2554, which were being rented from Madrigal & Company, Inc. The mortgage
was registered in the Registry of Deeds of Manila on 2 September 1955. The herein mortgage was executed
to guarantee a loan of P4,800.00 received from plaintiffs-appellees, payable within one year at 12% per
annum. The mode of payment was P150.00 monthly, starting September, 1955, up to July 1956, and the
lump sum of P3,150 was payable on or before August, 1956.
Defendants-appellants defaulted in paying, the mortgage was extrajudicially foreclosed, and on 27 March
1956, the house was sold at public auction pursuant to the said contract. As highest bidder, plaintiffs-
appellees were issued the corresponding certificate of sale. Thereafter, on 18 April 1956, plaintiffs-
appellees commenced Civil Case No. 43073 in the municipal court of Manila, praying, among other things,
that the house be vacated and its possession surrendered to them, and for defendants-appellants to pay
rent of P200.00 monthly from 27 March 1956 up to the time the possession is surrendered.
Issue: WON the chattel mortgage executed upon an immovable valid?
Held: Yes. Citing Manarang and Manarang vs. Ofilada, the Court stated that "it is undeniable that the parties
to a contract may by agreement treat as personal property that which by ,nature would be real property",
citing Standard Oil Company of New York vs. Jaramillo. Further, the doctrine of estoppel applies in this case
as against the defendants in which they are estopped from taking an inconsistent ground by claiming
otherwise. Having previously treated such property as personal property and that they themselves try to
assail the validity as debtor-mortgagor (being privy to the contract) and not third persons thus, doctrine of
estoppel applies.
11. PASTOR D. AGO VS. THE HON. COURT OF APPEALS (GR NO. L-17898)
FACTS:

In 1957, petitioner Pastor D. Ago bought sawmill machineries and equipments from respondent Grace Park
Engineering, Inc., executing a chattel mortgage over said machineries and equipments to secure the
payment of a balance remaining unpaid totalling P32,000.00, to which petitioner agreed to pay on
installment basis.
Petitioner Ago defaulted in his payments and so, in 1958, respondent Grace Park Engineering, Inc. instituted
extrajudicial foreclosure proceedings on the mortgage in the Court of First Instance of Agusan. The parties
to the case arrived at a compromise agreement which was submitted to the court in writing, signed by both
petitioner and respondent. The judge of the Court of First Instance of Agusan then dictated a decision in
open court on January 28, 1959.
When petitioner continued to default in his payments, Grace Park Engineering, Inc. filed with the lower
court a motion for execution, which was granted on August 15, 1959. A writ of execution, dated September
23, 1959, later followed. The herein respondent Provincial Sheriff of Surigao, acting upon the writ of
execution issued by the lower court, levied upon and ordered the sale of the sawmill machineries and
equipments. These machineries and equipments had been taken to and installed in a sawmill building
owned by the Golden Pacific Sawmill, Inc., to whom, petitioner alleges, he had sold them on February 16,
1959 (a date after the decision of the lower court but before levy by the Sheriff).
Having been advised by the sheriff that the public auction sale was set for December 4, 1959, petitioner
filed the petition for certiorari and prohibition with preliminary injunction with respondent Court of Appeals
on December 1, 1959, alleging: (1) that a copy of the aforementioned judgment given in open court was
served upon petitioner’s counsel only on September 25, 1959 when the writ of execution was dated
September 23, 1959; (2) that the order and writ of execution having been issued by the lower court before
petitioner’s counsel received a copy of the judgment, its resultant last order that the "sheriff may now
proceed with the sale of the properties levied" constituted a grave abuse of discretion and was in excess of
its jurisdiction; and (3) that the respondent Provincial Sheriff of Surigao was acting illegally upon the
allegedly void writ of execution by levying the same upon the sawmill machineries and equipments which
have become real properties of the Golden Pacific Sawmill, Inc.
The Court of Appeals issued a writ of preliminary injunction against the sheriff on December 8, 1959.
However, it turned out that the latter had already sold at public auction the machineries on December 4,
1959. The respondent Grace Park Engineering, Inc. was the only bidder for P15,000.00, although the
certificate of sale was not yet executed. The Court of Appeals instructed the sheriff to suspend the issuance
of a certificate of sale until the final decision of the case. On November 9, 1960, the Court of Appeals
rendered a decision stating that the lower court did not exceed nor abuse its jurisdiction in ordering the
execution of the judgment.
Petitioner now alleges before this Court that the respondent Court of Appeals erred (1) in holding that the
rendition of the judgment on compromise was a sufficient notice; and (2) in not resolving the other issues
raised before it, namely, (a) the legality of the public auction sale made by the sheriff, and (b) the nature of
the machineries in question, whether they are movables or immovables.
ISSUE(S):
The nature of the machineries and equipments mortgaged and subsequently sold in the public auction.
RULING:
It was held that the sawmill machineries and equipments are real estate properties. The record shows that
after petitioner had purchased the sawmill machineries and equipments, he assigned the same to the
Golden Pacific Sawmill, Inc. in payment of his subscription to the shares of stock of said corporation.
Thereafter, the sawmill machineries and equipments were installed in a building and permanently attached
to the ground. By reason of such installment in a building, the said sawmill machineries and equipments
became real estate properties in accordance with the provision of Art. 415 (5) of the Civil Code, thus: "The
following are immovable property - xxx xxx xxx (5) Machinery receptacles instruments or implements
intended by the owner of the tenement for an industry or works which may be carried on in a building or
on a piece of land, and which tend directly to meet the needs of the said industry or works;" xxx xxx xxx
The Court interpreted a similar question raised before in the case of Berkenkotter vs. Cu Unjieng e Hijos (61
Phil. 683) and held that the installation of the machinery and equipment in the central of the Mabalacat
Sugar Co., Inc. for use in connection with the industry carried by that company, converted the said
machinery and equipment into real estate by reason of their purpose. Paraphrasing the language of the said
decision, the Court held that by the installation of the sawmill machineries in the building of the Golden
Pacific Sawmill, Inc., for use in the sawing of logs carried on in said building, the same became a necessary
and permanent part of the building or real estate on which the same was constructed, converting the said
machineries and equipments into real estate within the meaning of Article 415 (5).
Considering that the machineries and equipments in question, valued at more than P15,000.00, appear to
have been sold without the necessary advertisement of sale by publication in a newspaper, as required in
Sec. 16 of Rule 39 of the Rules of Court, the sale made by the sheriff must be declared null and void.
12. THE UNITED STATES VS. IGNACIO CARLOS (GR NO. 6295)
Facts: Ignacio Carlos has been a consumer of electricity furnished by the Manila Electric Railroal and Light
Company for building containing residence of the accused and 30 other residences. Representatives of the
company believing that more light is consumed than what is shown in the meter installed on the pole
outside Carlos’ house to compare actual consumption and found out that the latter used a jumper.
Further, a jumper was found in a drawer of a small cabinet in the room the of defendant’s house were a
meter was installed. In the absence of any explanation for Carlos’ possession of said device, the presumption
raised was that Carlos was the owner of the device whose purpose was to deflect the current from the
meter.
Thus he was charged with a crime of larceny/ theft amounting to 2,273 kw of electric power.
Issue: WON the court erred in declaring that the electrical energy may be stolen.
Held:
Based on this
Article 517 of the Penal Code above referred to reads as follows:
The following are guilty of larceny:

(1) Those who with intent of gain and without violence or intimidation against the person, or force against
things, shall take another's personal property without the owner's consent.
It is true that electricity is no longer, as formerly regarded by electricians, as fluid. But its manifestation and
effects, like those of gas, may be seen and felt. The true test of what may be stolen is not whether it is
corporeal or incorporeal, but whether, being possessed of value, a person other than the owner, may
appropriate the same. Electricity, like gas, is valuable merchandise, and may thus be stolen.
Story B
FACTS: Carlos stole about 2273 kilowatts of electricity worth 909 pesos from Meralco. The court issued a
warrant of arrest. Carlos demurred and refused to enter a plea. He claimed that what he did failed to
constitute an offense. His counsel further asserted that the crime of larceny applied only to tangibles,
chattels and objects that can be taken into possession and spirited away, hence a movable property.
Deliberation quickly followed at the court which subsequently sentenced him to over a year in jail. Mr.
Carlos contested saying that electrical energy cannot be stolen (how can one steal an incorporeal thing?).
He filed an appeal on such grounds and the court of first instance affirmed the decision. The case reached
the Supreme Court.
ISSUE:
Whether or not the court erred in declaring that electrical energy can be stolen?
RULING:
Yes. Analogically, electricity can be considered as ‘gas’ which can be stolen. However, the true test of what
constitutes the proper subject of larceny is not whether the subject is corporeal or incorporeal, but whether
it is capable of appropriation by another other than the owner. It is a valuable article of merchandise, a force
of nature brought under the control of science. Mr. Carlos secretly and with intent to deprive the company
of its rightful property, used jumper cables to appropriate the same for his own use. This constitutes larceny.
13. LUIS MARCOS LAUREL VS. HON. ZEUS ABROGAR (GR NO. 155076)
Facts:
• Laurel was charged with Theft under Art. 308 of the RPC for allegedly taking, stealing, and using PLDT's
international long distance calls by conducting International Simple Resale (ISR) – “a method of outing and
completing international long-distance calls using lines, cables, antennae, and/or air wave frequency which
connect directly to the local/domestic exchange facilities of the country where the call is destined”. PLDT
alleged that this service was stolen from them using their own equipment and caused damage to them
amounting to P20,370,651.92;
• The Court held that Amended Information does not contain material allegations charging petitioner with
theft of personal property since international long distance calls and the business of providing
telecommunication or telephone services are not personal properties under Article 308 of the Revised Penal
Code.
Issue: WON International Simple Resale (international long-distance calls) maybe be considered as personal
property, thus constituting theft
Held: Yes.
• The elements of theft under Article 308 of the Revised Penal Code are as follows: (1) that there be taking
of personal property; (2) that said property belongs to another; (3) that the taking be done with intent to
gain; (4) that the taking be done without the consent of the owner; and (5) that the taking be accomplished
without the use of violence against or intimidation of persons or force upon things. SDHETI
• Any personal property, tangible or intangible, corporeal or incorporeal, capable of appropriation can be
the object of theft. In Article 335 of the Civil Code of Spain, "personal property" is defined as "anything
susceptible of appropriation and not included in the foregoing chapter (not real property)". The only
requirement for a personal property to be the object of theft under the penal code is that it be capable of
appropriation. It need not be capable of "asportation", which is defined as "carrying away".
• To appropriate means to deprive the lawful owner of the thing. The word "take" in the Revised Penal Code
includes any act intended to transfer possession which, as held in the assailed Decision, may be committed
through the use of the offenders' own hands, as well as any mechanical device, such as an access device or
card as in the instant case. This includes controlling the destination of the property stolen to deprive the
owner of the property, such as the use of a meter tampering, use of a device to fraudulently obtain gas and
the use of jumper to divert electricity. In the instant case, the act of conducting ISR operations by illegally
connecting various equipment or apparatus to private respondent PLDT's telephone system, through which
petitioner is able to resell or re-route international long distance calls using respondent PLDT's facilities
constitutes all three acts of subtraction mentioned above.
• The business of providing telecommunication or telephone service is likewise personal property which
can be the object of theft under Article 308 of the Revised Penal Code.
Article 414 of the Civil Code provides that all things which are or may be the object of appropriation are
considered either real property or personal property. Business is likewise not enumerated as personal
property under the Civil Code. Just like interest in business, however, it may be appropriated. Following the
ruling in Strochecker v. Ramirez, business should also be classified as personal property. Since it is not
included in the exclusive enumeration of real properties under Article 415, it is therefore personal property.
As can be clearly gleaned from the above disquisitions, petitioner's acts constitute theft of respondent
PLDT's business and service (which are considered movables/immovables)., committed by means of the
unlawful use of the latter's facilities.
14. MUNICIPALITY OF CAVITE VS. ROJAS (30 PHIL 20)
FACTS:
By an instrument dated December 5, 1911, afterwards amended on March 14,1912, the provincial fiscal of
Cavite, representing the municipality of that name, filed a complaint in the Court of First Instance of said
province alleging that the plaintiff municipal corporation, duly organized and constituted in accordance with
Act No. 82, and as the successor to the rights said entity had under the late Spanish government, and by
virtue of Act No. 1039, had exclusive right, control and administration over the streets, lanes, plazas, and
public places of the municipality of Cavite; that the defendants, by virtue of a lease secured from the plaintiff
municipality, occupy a parcel of land 93 square meters in area that forms part of the public plaza known
under the name of Soledad, belonging to the municipality of Cavite, the defendants having constructed

thereon a house, through payment to the plaintiff for occupation thereof of a rental of P5.58 a quarter in
advance, said defendants being furthermore obligated to vacate the leased land within sixty days
subsequent to plaintiff's demand to that effect; that the defendants have been required by the municipality
to vacate and deliver possession of the said land, but more than the sixty days within which they ought to
have vacated it have elapsed without their having done so to date.
ISSUE: WON the lease of a public plaza of the said municipality in favor of a private person is null and void
HELD: NULL & VOID
According to article 344 of the Civil Code: "Property for public use in provinces and in towns comprises the
provincial and town roads, the squares, streets, fountains, and public waters, the promenades, and public
works of general service supported by said towns or provinces."
The said Plaza Soledad being a promenade for public use, the municipal council of Cavite could not in 1907
withdraw or exclude from public use a portion thereof in order to lease it for the sole benefit of the
defendant Hilaria Rojas. In leasing a portion of said plaza or public place to the defendant for private use
the plaintiff municipality exceeded its authority in the exercise of its powers by executing a contract over a
thing of which it could not dispose, nor is it empowered so to do.
The Civil Code, article 1271, prescribes that everything which is not outside the commerce of man may be
the object of a contract, and plazas and streets are outside of this commerce, as was decided by the supreme
court of Spain in its decision of February 12, 1895, which says: "Communal things that cannot be sold
because they are by their very nature outside of commerce are those for public use, such as the plazas,
streets, common lands, rivers, fountains, etc."
Therefore, it must be concluded that the contract, Exhibit C, whereby the municipality of Cavite leased to
Hilaria Rojas a portion of the Plaza Soledad is null and void and of no force or effect, because it is contrary
to the law and the thing leased cannot be the object of a contract. On the hypothesis that the said lease is
null and void in accordance with the provisions of article 1303 of the Civil Code, the defendant must restore
and deliver possession of the land described in the complaint to the municipality of Cavite, which in its turn
must restore to the said defendant all the sums it may have received from her in the nature of rentals just
as soon as she restores the land improperly leased. For the same reasons as have been set forth, and as said
contract is null and void in its origin, it can produce no effect and consequently the defendant is not entitled
to claim that the plaintiff municipality indemnify her for the damages she may suffer by the removal of her
house from the said land.
15. MANECLANG VS. IAC (144 SCRA 553)
Facts: Petitioners Adriano Maneclang, et. al. filed before the then Court of First Instance of Pangasinan,
Branch XI a complaint for quieting of title over a certain fishpond located within the four parcels of land
belonging to them situated in Barrio Salomague, Bugallon, Pangasinan, and the annulment of Resolutions
Nos. 38 and 95 of the Municipal Council of Bugallon Pangasinan. The trial court dismissed the complaint in
a decision dated August 15, 1975 upon a finding that the body of water traversing the titled properties of
petitioners is a creek constituting a tributary of the Agno River; therefore public in nature and not subject
to private appropriation.

Petitioners appealed said decision to the Intermediate Appellate Court, which affirmed the same on April
29, 1983. Hence, this petition for review on certiorari.
Acting on the petition, the Court required the respondents to comment thereon. However, before
respondents could do so, petitioners manifested that for lack of interest on the part of respondent Alfredo
Maza, the awardee in the public bidding of the fishpond, the parties desire to amicably settle the case by
submitting to the Court a Compromise Agreement praying that judgment be rendered recognizing the
ownership of petitioners over the land the body of water found within their titled properties, stating therein,
among other things, that "to pursue the case, the same will not amount to any benefit of the parties, on the
other hand it is to the advantage and benefit of the municipality if the ownership of the land and the water
found therein belonging to petitioners be recognized in their favor as it is now clear that after the National
Irrigation Administration [NIA] had built the dike around the land, no water gets in or out of the land.
Issue:
WON the fishpond is public in nature
WON the same can be the subject of a compromise agreement
Held:
1) YES. A creek, defined as a recess or arm extending from a river and participating in the ebb and flow of
the sea, is a property belonging to the public domain which is not susceptible to private appropriation
and acquisitive prescription, and as a public water, it cannot be registered under the Torrens System in
the name of any individual.
2) No. The Court finds the Compromise Agreement null and void and of no legal effect, the same being
contrary to law and public policy.
16. RP vs. Mendoza (GR 153726) – Exception to the rule that body of water cannot be alienated.
FACTS: Democratico T. Mendoza (respondent) is in possession of 70 or so hectares in Silot Bay through an
Ordinary Fishpond Permit.
On Jan 16, 1967, Pres. Marcos ordered a memorandum that about 700,000 fishpond areas (including
respondent’s land) shall be released by the Bureau of Forestry to the Bureau of Lands as alienable and
disposable, but subject to the disposal of the Bureau of Fisheries for fishpond purposes
Pursuant to that, respondent issued a sales patent application in order to purchase the said land and was
approved, thus an auction was scheduled.
Despite objection of the local Mayor, on 21 May 1974, then Presidential Executive Assistant Jacobo C. Clave
issued a Memorandum informing the Secretary of the Department of Natural Resources that President
Marcos had approved the recommendation advising approval of the request of Democrito Mendoza, Sr. for
the issuance of a patent over the disputed property.
Prior to the approval, Democrito subdivided the lots and assigned rights and interests in equal shares to
each of his daughters.
On 26 June 1974, Acting Director of the Bureau of Lands Ramon N. Casanova issued an Order awarding the
sales patents over the disputed property to Democrito Mendoza, Sr. and his three children Gwendolyn,
Vilma, and Democrito, Jr., respectively
Sometime in 1988, a protest was filed by the fisherman-residents of Liloan against the issuance of the sales
patents to the Mendozas. Acting thereon, the Department of Environment and Natural Resources (DENR)
Regional Office No. 7, Cebu City, conducted an investigation
On 23 October 1990, based on the information gathered by the DENR, showing that there were alleged
irregularities in the issuance of the sales patents awarded to the Mendozas, the Republic of the Philippines,
represented by the Director of the Land Management Bureau, filed with the RTC of Cebu, a complaint for
Cancellation of Sales Patents and Titles against Democrito Mendoza, Sr. and his three children Gwendolyn,
Vilma, and Democrito, Jr., together with the Register of Deeds of Cebu City
After trial on the merits, the trial court, on 3 June 1996, rendered a Decision declaring the sales patents, as
well as the original certificates of title issued to the Mendozas as null and void ab initio. Declaring that:
1. The sales patent issued be declared void ab initio
2. Ordering said defendants to surrender their OCT’s to the register of deeds and ordering the said register
of deeds to cancel the same and all patent titles emanating therefrom.
3. Declaring the lot as inalienable and non-disposable being parts of Silot Bay.
Aggrieved by the Decision, defendants appealed the Case of the CA, and accordingly, CA reversed the RTC’s
decision:
ISSUE:
Whether or not said property is alienable and disposable and, therefore, subject to private appropriation
through modes recognized under the Public Land Act.
HELD:
Yes, the property is alienable and disposable. Despite petitioners' assertion that Silot Bay is a navigable body
of water and by its very nature and inherent character is of public dominion, thus, there is no need for a
declaration by any appropriate government agency that it is a communal fishing ground before Silot Bay
may be recognized as such, it cannot be gainsaid that the prerogative of classifying public lands pertains to
administrative agencies which have been specially tasked by statutes to do so and that the courts will not
interfere on matters which are addressed to the sound discretion of government and/or quasi-judicial
agencies entrusted with the regulation of activities coming under their special technical knowledge and
training. It should be stressed that the function of administering and disposing of lands of the public domain
in the manner prescribed by law is not entrusted to the courts but to executive officials. And as such, courts
should refrain from looking into the underlying reasons or grounds which impelled the classification and
declaration of Silot Bay as timberland and its subsequent release as alienable and disposable land. From the
facts of the case, it is evident that the Bureau of Forestry released Silot Bay as alienable and disposable by
virtue of the Memorandum issued by then President Marcos on 16 January 1967 which clearly empowered
said bureau to identify and locate the 700,000 hectares of fishpond areas and to release said areas as
alienable and disposable. Hence, the courts, in view of the clear legal directive by which said area was
released as alienable and disposable, will refrain from questioning the wisdom of such classification or
declaration. After a careful perusal of the records of the case, we rule that the sales patents handed out to

Democrito T. Mendoza, Sr., Gwendolyn Mendoza, Vilma Mendoza and Democrito Mendoza, Jr., were
properly issued.
17. IGNACIO VS. DIRECTOR OF LANDS (108 PHIL 335)

Facts: Petitioner filed an application for registration of adjacent (mangrove) land by claiming ownership by
right of accretion located near the Manila Bay. Such application was opposed by the Director of lands
claiming that such lands are part of public domain. Appellant contends that the parcel belongs to him by
the law of accretion, having been formed by gradual deposit by action of the Manila Bay, and he cites Article
457 of the New Civil Code (Article 366, Old Civil Code), which provides that:
To the owners of lands adjoining the banks of rivers belong the accretion which they gradually receive
from the effects of the current of the waters.
Appellant next contends that Articles 1, 4 and 5 of the Law of Waters are not applicable because they refer
to accretions formed by the sea, and that Manila Bay cannot be considered as a sea.
Article 4 of the Law of Waters of 1866 reads thus:
ART. 4. Lands added to the shores by accretions and alluvial deposits caused by the action of the sea,
form part of the public domain. When they are no longer washed by the waters of the sea and are not
necessary for purposes of public utility, or for the establishment of special industries, or for the
coastguard service, the Government shall declare them to be the property of the owners of the
estates adjacent thereto and as increment thereof.
Trial Court decided in favor of the government holding it as public domain. Hence, present petition.
Issue:
WON the land is part of public domain
WON Appellant was right in saying that Articles 1, 4 and 5 of the Law of Waters are not applicable
WON Appellant can acquire the lot by reason of acquisitive prescription
Held:
1) Yes. Public Domain. First, right of accretion mentioned in Art. 457 applies only to gradual deposits on
the BANKS OF RIVERS (not BAYs) and not in such case where accretion was due to the MANILA BAY thus
it is public domain. Second, as to the claim that even if it formed part of public domain, such was no
longer necessary for public use therefore disposable and available for private ownership was untenable
because SC reiterated that in interpreting Art. 4 of Law of Waters there is a need of a positive declaration
on the part of the government (executive or legislative) that such land is not necessary for public
purpose thus subject to private ownership or to be A and D. Until a positive declaration said land
continue to be part of public domain. Third, Acquisitive Prescription does not lie since lands of public
domain are not subject to ordinary prescription being outside of commerce of man.
2) No. We find said contention untenable. A bay is a part of the sea, being a mere indentation of the same:
Bay. — An opening into the land where the water is shut in on all sides except at the entrance; an
inlet of the sea; an arm of the sea, distinct from a river, a bending or curbing of the shore of the
sea or of a lake.
Until a formal declaration on the part of the Government, through the executive department or the
Legislature, to the effect that the land in question is no longer needed for coast guard service, for public
use or for special industries, they continue to be part of the public domain, not available for private
appropriation or ownership.
3) No. That land of the public domain is not subject to ordinary prescription.
18. MACASIANO VS. DIOKNO (GR NO. 97764)
The municipality can only convey real properties only if the said land is classified as patrimonial property.
FACTS:
On June 13, 1990, the respondent Municipality of Parañaque passed Ordinance No. 86, Series of 1990 which
authorized the closure of J. Gabrielle, G.G. Cruz, Bayanihan, Lt. Garcia Extension and Opena Streets located
at Baclaran, Parañaque, Metro Manila and the establishment of a flea market thereon. The ordinance was
approved by the municipal council pursuant to MCC Ordinance No. 2, Series of 1979, authorizing and
regulating the use of certain city and/or municipal streets, roads and open spaces within Metropolitan
Manila as sites for flea market and/or vending areas, under certain terms and conditions.
On July 20, 1990, the Metropolitan Manila Authority approved Ordinance No. 86, s. 1990 of the municipal
council of the respondent municipality subject to the following conditions:
(1) that the streets are not used for vehicular traffic and that the majority of the residents do not
oppose the establishment of the flea market/vending areas thereon;
(2) that the 2-meter middle road to be used as flea market/vending area shall be marked distinctly
and that the 2 meters on both sides of the road shall be used by pedestrians;
(3) that the time during which the vending area is to be used shall be clearly designated; and
(4) that the use of the vending areas shall be temporary and shall be closed once the reclaimed areas
are developed and donated by the Public Estate Authority.
On June 20, 1990, the municipal council of Parañaque issued a resolution authorizing the Parañaque Mayor
to enter into a contract with any service cooperative for the establishment, operation, maintenance and
management of flea markets and/or vending areas. Subsequently on August 8, 1990, respondent
municipality and respondent Palanyag, a service cooperative, entered into an agreement whereby the latter
shall operate, maintain and manage the flea market in the aforementioned streets with the obligation to

remit dues to the treasury of the municipal government of Parañaque. Thereafter, market stalls were put
up by respondent Palanyag on the said streets.
However, on September 13, 1990, petitioner Macasiano, PNP Superintendent of the Metropolitan Traffic
Command, ordered the destruction and confiscation of stalls along G.G. Cruz and J. Gabrielle St. in Baclaran.
These stalls were later returned to respondent Palanyag. Petitioner then wrote a letter, on October 16,
1990, to respondent Palanyag giving the latter ten (10) days to discontinue the flea market; otherwise, the
market stalls shall be dismantled.
Hence, respondents municipality and Palanyag filed with the trial court a joint petition for prohibition and
mandamus with damages and prayer for preliminary injunction. On October 24, 1990, the trial court issued
a temporary restraining order to enjoin petitioner from enforcing his letter-order of October 16, 1990
pending the hearing on the motion for writ of preliminary injunction. Thereafter, the trial court issued an
order on December 17, 1990, upholding the validity of Ordinance No. 86 s. 1990 of the respondent
municipality and enjoining the petitioner from enforcing his letter-order against respondent Palayag.
This petition was then filed by the petitioner Macasiano, thru the Office of the Solicitor General, alleging
grave abuse of discretion amounting to lack or excess of jurisdiction on the part of the trial judge in issuing
the assailed order. The Solicitor General contends that municipal roads are used for public service and are,
therefore, public properties; that as such, they cannot be subject to private appropriation or private contract
by any person, even by the respondent municipality. Petitioner submits that a property already dedicated
to public use cannot be used for another public purpose and that absent a clear showing that the respondent
municipality has been granted by the legislature a specific authority to convert a property already in public
use to another public use, respondent municipality is, therefore, bereft of any authority to close municipal
roads for the establishment of a flea market.
ISSUE(S):
Whether or not an ordinance issued by the municipal council authorizing the lease and use of public streets
or thoroughfares as sites for flea markets is valid.
RULING: No. The municipality had no authority to lease the public streets. Even assuming it had authority,
it can’t be considered approved by the Metropolitan Manila Authority due to non-compliance with the
conditions it imposed for the approval of said ordinance.
The Court held that the petitioner’s contention is meritorious.
The property of provinces, cities and municipalities is divided into property for public use and patrimonial
property as provided for in Art. 423 of the Civil Code. As to what consists of property for public use, Article
424 of Civil Code states: "Property for public use, in the provinces, cities and municipalities, consists of the
provincial roads, city streets, the squares, fountains, public waters, promenades, and public works for public
service paid for by said provinces, cities or municipalities. All other property possessed by any of them is
patrimonial and shall be governed by this Code, without prejudice to the provisions of special laws."
Based on the foregoing, J. Gabrielle G.G. Cruz, Bayanihan, Lt. Gacia Extension and Opena streets are local
roads used for public service and are therefore considered public properties of respondent municipality.
Properties of the local government which are devoted to public service are deemed public and are under
the absolute control of Congress, as held in the case of Province of Zamboanga del Norte v. City of

Zamboanga. Hence, local governments have no authority whatsoever to control or regulate the use of public
properties unless specific authority is vested upon them by Congress. One example of this authority given
by Congress to the local governments is the power to close roads as provided in Section 10 of the Local
Government Code, which states: "A local government unit may likewise, through its head acting pursuant
to a resolution of its sangguniang and in accordance with existing law and the provisions of this Code, close
any barangay, municipal, city or provincial road, street, alley, park or square. No such way or place or any
part thereof shall be closed without indemnifying any person prejudiced thereby. A property thus
withdrawn from public use may be used or conveyed for any purpose for which other real property
belonging to the local unit concerned might be lawfully used or conveyed."
However, the aforestated legal provision which gives authority to local government units to close roads and
other similar public places should be read and interpreted in accordance with basic principles already
established by law, which have the effect of limiting such authority of the province, city or municipality to
close a public street or thoroughfare. Article 424 of the Civil Code lays down the basic principle that
properties of public dominion devoted to public use and made available to the public in general are outside
the commerce of man and cannot be disposed of or leased by the local government unit to private persons.
Aside from the requirement of due process which should be complied with before closing a road, street or
park, the closure should be for the sole purpose of withdrawing the road or other public property from
public use when circumstances show that such property is no longer intended or necessary for public use
or public service. When it is already withdrawn from public use, the property then becomes patrimonial
property of the local government unit concerned as provided for in Article 422 of the Civil Code and as held
in the case of Cebu Oxygen, etc. et al. v. Bercilles, et al. It is only then that the respondent municipality can
"use or convey them for any purpose for which other real property belonging to the local unit concerned
might be lawfully used or conveyed" in accordance with the last sentence of Section 10 of the LGC.
In one case, the City Council of Cebu, through a resolution, declared the terminal road of M. Borces Street,
Mabolo, Cebu City as an abandoned road, the same not being included in the City Development Plan.
Thereafter, the City Council passed another resolution authorizing the sale of the said abandoned road
through public bidding. We held therein that the City of Cebu is empowered to close a city street and to
vacate or withdraw the same from public use. Such withdrawn portion becomes patrimonial property which
can be the object of an ordinary contract. However, those roads and streets which are available to the public
in general and ordinarily used for vehicular traffic are still considered public property devoted to public use.
In such case, the local government has no power to use it for another purpose or to dispose of or lease it to
private persons.
This limitation on the authority of the local government over public properties has been discussed and
settled in the case of Francisco v. Dacanay, wherein it was held that: "There is no doubt that the disputed
areas from which the private respondents' market stalls are sought to be evicted are public streets, as found
by the trial court in Civil Case No. C-12921. A public street is property for public use hence outside the
commerce of man. Being outside the commerce of man, it may not be the subject of lease or other contract.
xxx xxx xxx As the stallholders pay fees to the City Government for the right to occupy portions of the public
street, the City Government, contrary to law, has been leasing portions of the streets to them. Such leases
or licenses are null and void for being contrary to law. The right of the public to use the city streets may not
be bargained away through contract. The interests of a few should not prevail over the good of the greater
number in the community whose health, peace, safety, good order and general welfare, the respondent city
officials are under legal obligation to protect.”
Even assuming that respondent municipality has the authority to pass the disputed ordinance, the same
cannot be validly implemented because it cannot be considered approved by the Metropolitan Manila
Authority due to non-compliance by respondent municipality of the conditions imposed by the former for
the approval of the ordinance to wit:
1. That the aforenamed streets are not used for vehicular traffic, and that the majority of the
residents do(es) not oppose the establishment of the flea market/vending areas thereon;
2. That the 2-meter middle road to be used as flea market/vending area shall be marked distinctly,
and that the 2 meters on both sides of the road shall be used by pedestrians;
3. That the time during which the vending area is to be used shall be clearly designated;
4. That the use of the vending areas shall be temporary and shall be closed once the reclaimed areas
are developed and donated by the Public Estate Authority.
Respondent municipality has not shown any iota of proof that it has complied with the foregoing conditions
precedent to the approval of the ordinance.
Moreover, the powers of a local government unit are not absolute. They are subject to limitations laid down
by the Constitution and the laws such as our Civil Code. Moreover, the exercise of such powers should be
subservient to paramount considerations of health and well-being of the members of the community. As
held in the Dacanay case, the general public have a legal right to demand the demolition of the illegally
constructed stalls in public roads and streets and the officials of respondent municipality have the
corresponding duty arising from public office to clear the city streets and restore them to their specific public
purpose. Thus, the ordinance enacted by respondent municipality is void and illegal for lack of basis and
authority in laws.
19. CEBU OXYGEN & ACETYLENE CO., INC. VS. BERCILLES (GR NO. L-40474)
Facts: In 1968, a terminal portion of a street in Cebu was excluded in the city’s development plan hence the
council declared it as abandoned and was subsequently opened for public bidding. Cebu Oxygen was the
highest bidder @P10,800.00. Cebu Oxygen applied for the land’s registration before CFI Cebu but the
provincial fiscal denied it, so did the court later, alleging that the road is part of the public domain hence
beyond the commerce of man.
Issue: Whether or not Cebu Oxygen can validly own said land.
Held: Yes. Under Cebu’s Charter (RA 3857), the city council “may close any city road, street or alley,
boulevard, avenue, park or square. Property thus withdrawn from public servitude may be used or conveyed
for any purpose for which other real property belonging to the City may be lawfully used or conveyed.”
Since that portion of the city street subject of Cebu Oxygen’s application for registration of title was
withdrawn from public use, it follows that such withdrawn portion becomes patrimonial property which can
be the object of an ordinary contract.

Article 422 of the Civil Code expressly provides that “Property of public dominion, when no longer intended
for public use or for public service, shall form part of the patrimonial property of the State.”
20. LAUREL VS. GARCIA (GR NO. 92013)
Facts:
The subject property in this case is one of the four (4) properties in Japan acquired by the Philippine
government under the Reparations Agreement entered into with Japan on May 9, 1956;
The properties and the capital goods and services procured from the Japanese government for national
development projects are part of the indemnification to the Filipino people for their losses in life and
property and their suffering during World War II.
The Roponggi property consists of the land and building "for the Chancery of the Philippine Embassy". As
intended, it became the site of the Philippine Embassy until the latter was transferred to Nampeidai on July
22, 1976 when the Roppongi building needed major repairs. Due to the failure of our government to provide
necessary funds, the Roppongi property has remained undeveloped since that time.
A proposal was presented to President Corazon C. Aquino by former Philippine Ambassador to Japan, Carlos
J. Valdez, to make the property the subject of a lease agreement with a Japanese firm — Kajima. At the end
of the lease period, all the three leased buildings shall be occupied and used by the Philippine government.
No change of ownership or title shall occur. The Philippine government retains the title all throughout the
lease period and thereafter. However, the government has not acted favorably on this proposal which is
pending approval and ratification between the parties. On August 11, 1986, President Aquino created a
committee to study the disposition/utilization of Philippine government properties in Tokyo and Kobe,
Japan.
On July 25, 1987, the President issued Executive Order No. 296 entitling non-Filipino citizens or entities to
avail of reparations' capital goods and services in the event of sale, lease or disposition. The four properties
in Japan including the Roppongi were specifically mentioned in the first "Whereas" clause.
Amidst opposition by various sectors, the Executive branch of the government has been pushing, with great
vigor, its decision to sell the reparations properties starting with the Roppongi lot.
Issue:
WON the subject property can be alienated
Held:
• The Roppongi site and the three related properties were acquired through reparations agreements and
the Poppongi site was specifically designated under the Reparations Agreement to house the Philippine
Embassy. The nature of the Roppongi lot as property for public service is expressly spelled out. It is dictated
by the terms of the Reparations Agreement and the corresponding contract of procurement which bind
both the Philippine government and the Japanese government. There can be no doubt that it is of public
dominion unless it is convincingly shown that the property has become patrimonial.
• As property of public dominion, the Roppongi lot is outside the commerce of man. It cannot be alienated.
Its ownership is a special collective ownership for general use and enjoyment, an application to the
satisfaction of collective needs, and resides in the social group. The applicable provisions of the Civil Code
are:
"ART. 419.Property is either of public dominion or of private ownership.
"ART. 420.The following things are property of public dominion:
"(1)Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges constructed by
the State, banks, shores, roadsteads, and others of similar character;
(2)Those which belong to the State, without being for public use, and are intended for some public service
or for the development of the national wealth.
"ART. 421.All other property of the State, which is not of the character stated in the preceding article, is
patrimonial property."
• The Roppongi property is correctly classified under paragraph 2 of Article 420 of the Civil Code as property
belonging to the State and intended for some public service. The fact that the Roppongi site has not been
used for a long time for actual Embassy service does not automatically convert it to patrimonial property.
Any such conversion happens only if the property is withdrawn from public use (Cebu Oxygen and Acetylene
Co. v. Bercilles, 66 SCRA 481 [1975]). A property continues to be part of the public domain, not available for
private appropriation or ownership "until there is a formal declaration on the part of the government to
withdraw it from being such (Ignacio v. Director of Lands, 108 Phil. 335 [1960]).
• The respondents enumerate various pronouncements by concerned public officials insinuating a change
of intention. We emphasize, however, that an abandonment of the intention to use the Roppongi property
for public service and to make it patrimonial property under Article 422 of the Civil Code must be definite.
Abandonment cannot be inferred from the non-use alone specially if the non-use was attributable not to
the government's own deliberate and indubitable will but to a lack of financial support to repair and improve
the property (See Heirs of Felino Santiago v. Lazarao, 166 SCRA 368 [1988]). Abandonment must be a certain
and positive act based on correct legal premises.
21. MANILA INTERNATIONAL AIRPORT AUTHORITY VS. COURT OF APPEALS, ET. AL. (GR NO. 155650)
Petitioner Manila International Airport Authority (MIAA) operates the Ninoy Aquino International Airport
(NAIA) Complex in Parañaque City under Executive Order No. 903, otherwise known as the Revised Charter
of the Manila International Airport Authority ("MIAA Charter"). Executive Order No. 903 was issued on 21
July 1983 by then President Ferdinand E. Marcos. Subsequently, Executive Order Nos. 909 1 and 298 2
amended the MIAA Charter.
As operator of the international airport, MIAA administers the land, improvements and equipment within
the NAIA Complex. The MIAA Charter transferred to MIAA approximately 600 hectares of land, 3 including
the runways and buildings ("Airport Lands and Buildings") then under the Bureau of Air Transportation. 4
The MIAA Charter further provides that no portion of the land transferred to MIAA shall be disposed of
through sale or any other mode unless specifically approved by the President of the Philippines. 5
On 21 March 1997, the Office of the Government Corporate Counsel (OGCC) issued Opinion No. 061. The
OGCC opined that the Local Government Code of 1991 withdrew the exemption from real estate tax granted
to MIAA under Section 21 of the MIAA Charter. Thus, MIAA negotiated with respondent City of Parañaque
to pay the real estate tax imposed by the City. MIAA then paid some of the real estate tax already due.
On 28 June 2001, MIAA received Final Notices of Real Estate Tax Delinquency from the City of Parañaque
for the taxable years 1992 to 2001.

On 17 July 2001, the City of Parañaque, through its City Treasurer, issued notices of levy and warrants of
levy on the Airport Lands and Buildings. The Mayor of the City of Parañaque threatened to sell at public
auction the Airport Lands and Buildings should MIAA fail to pay the real estate tax delinquency. MIAA thus
sought a clarification of OGCC Opinion No. 061.
On 9 August 2001, the OGCC issued Opinion No. 147 clarifying OGCC Opinion No. 061. The OGCC pointed
out that Section 206 of the Local Government Code requires persons exempt from real estate tax to show
proof of exemption. The OGCC opined that Section 21 of the MIAA Charter is the proof that MIAA is exempt
from real estate tax.
MIAA admits that the MIAA Charter has placed the title to the Airport Lands and Buildings in the name of
MIAA. However, MIAA points out that it cannot claim ownership over these properties since the real owner
of the Airport Lands and Buildings is the Republic of the Philippines. The MIAA Charter mandates MIAA to
devote the Airport Lands and Buildings
for the benefit of the general public. Since the Airport Lands and Buildings are devoted to public use and
public service, the ownership of these properties remains with the State. The Airport Lands and Buildings
are thus inalienable and are not subject to real estate tax by local governments.
MIAA also points out that Section 21 of the MIAA Charter specifically exempts MIAA from the payment of
real estate tax. MIAA insists that it is also exempt from real estate tax under Section 234 of the Local
Government Code because the Airport Lands and Buildings are owned by the Republic. To justify the
exemption, MIAA invokes the principle that the government cannot tax itself. MIAA points out that the
reason for tax exemption of public property is that its taxation would not inure to any public advantage,
since in such a case the tax debtor is also the tax creditor.
Respondents invoke Section 193 of the Local Government Code, which expressly withdrew the tax
exemption privileges of "government-owned and-controlled corporations" upon the effectivity of the Local
Government Code. Respondents also argue that a basic rule of statutory construction is that the express
mention of one person, thing, or act excludes all others. An international airport is not among the exceptions
mentioned in Section 193 of the Local Government Code. Thus, respondents assert that MIAA cannot claim
that the Airport Lands and Buildings are exempt from real estate tax.
Respondents also cite the ruling of this Court in Mactan International Airport v. Marcos 8 where we held
that the Local Government Code has withdrawn the exemption from real estate tax granted to international
airports. Respondents further argue that since MIAA has already paid some of the real estate tax
assessments, it is now estopped from claiming that the Airport Lands and Buildings are exempt from real
estate tax.
ISSUE: Whether the Airport Lands and Buildings of MIAA are exempt from real estate tax under existing
laws. If so exempt, then the real estate tax assessments issued by the City of Parañaque, and all proceedings
taken pursuant to such assessments, are void.
HELD: We rule that MIAA's Airport Lands and Buildings are exempt from real estate tax imposed by local
governments.

First, MIAA is not a government-owned or controlled corporation but an instrumentality of the National
Government and thus exempt from local taxation. Second, the real properties of MIAA are owned by the
Republic of the Philippines and thus exempt from real estate tax.
1.MIAA is Not a Government-Owned or Controlled Corporation

Respondents argue that MIAA, being a government-owned or controlled corporation, is not exempt from
real estate tax. Respondents claim that the deletion of the phrase "any government-owned or controlled so
exempt by its charter" in Section 234(e) of the Local Government Code withdrew the real estate tax
exemption of government-owned or controlled corporations. The deleted phrase appeared in Section 40(a)
of the 1974 Real Property Tax Code enumerating the entities exempt from real estate tax.
There is no dispute that a government-owned or controlled corporation is not exempt from real estate tax.
However, MIAA is not a government-owned or controlled corporation. Section 2(13) of the Introductory
Provisions of the Administrative Code of 1987 defines a government-owned or controlled corporation as
follows:
A government-owned or controlled corporation must be "organized as a stock or non-stock corporation."
MIAA is not organized as a stock or non-stock corporation. MIAA is not a stock corporation because it has
no capital stock divided into shares. MIAA has no stockholders or voting shares
Since MIAA is neither a stock nor a non-stock corporation, MIAA does not qualify as a government-owned
or controlled corporation. What then is the legal status of MIAA within the National Government?
MIAA is a government instrumentality vested with corporate powers to perform efficiently its governmental
functions. MIAA is like any other government instrumentality, the only difference is that MIAA is vested with
corporate powers. Section 2(10) of the Introductory Provisions of the Administrative Code defines a
government "instrumentality" as follows:
SEC. 2.General Terms Defined. –– . . .
(10)Instrumentality refers to any agency of the National Government, not integrated within the department
framework, vested with special functions or jurisdiction by law, endowed with some if not all corporate
powers, administering special funds, and enjoying operational autonomy, usually through a charter. . . .
(Emphasis supplied)
A government instrumentality like MIAA falls under Section 133(o) of the Local Government Code, which
states:
SEC. 133.Common Limitations on the Taxing Powers of Local Government Units. — Unless otherwise
provided herein, the exercise of the taxing powers of provinces, cities, municipalities, and barangays shall
not extend to the levy of the following:
xxx xxx xxx
(o)Taxes, fees or charges of any kind on the National Government, its agencies and instrumentalities and
local government units.
There is also no reason for local governments to tax national government instrumentalities for rendering
essential public services to inhabitants of local governments. The only exception is when the legislature
clearly intended to tax government instrumentalities for the delivery of essential public services for sound
and compelling policy considerations. There must be express language in the law empowering local
governments to tax national government instrumentalities. Any doubt whether such power exists is
resolved against local governments.
Thus, Section 133 of the Local Government Code states that "unless otherwise provided" in the Code, local
governments cannot tax national government instrumentalities. As this Court held in Basco v. Philippine
Amusements and Gaming Corporation:
The states have no power by taxation or otherwise, to retard, impede, burden or in any manner control the
operation of constitutional laws enacted by Congress to carry into execution the powers vested in the
federal government. (MC Culloch v. Maryland, 4 Wheat 316, 4 L Ed. 579)
2. Airport Lands and Buildings of MIAA are Owned by the Republic

a.Airport Lands and Buildings are of Public Dominion
The Airport Lands and Buildings of MIAA are property of public dominion and therefore owned by the State
or the Republic of the Philippines. The Civil Code provides:
ARTICLE 419.Property is either of public dominion or of private ownership.
ARTICLE 420.The following things are property of public dominion:
(1)Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges constructed
by the State, banks, shores, roadsteads, and others of similar character;
(2)Those which belong to the State, without being for public use, and are intended for some public
service or for the development of the national wealth. (Emphasis supplied)
No one can dispute that properties of public dominion mentioned in Article 420 of the Civil Code, like "roads,
canals, rivers, torrents, ports and bridges constructed by the State," are owned by the State. The term
"ports" includes seaports and airports. The MIAA Airport Lands and Buildings constitute a "port" constructed
by the State. Under Article 420 of the Civil Code, the MIAA Airport Lands and Buildings are properties of
public dominion and thus owned by the State or the Republic of the Philippines.
The Airport Lands and Buildings are devoted to public use because they are used by the public for
international and domestic travel and transportation. The fact that the MIAA collects terminal fees and
other charges from the public does not remove the character of the Airport Lands and Buildings as
properties for public use. The operation by the government of a tollway does not change the character of
the road as one for public use. Someone must pay for the maintenance of the road, either the public
indirectly through the taxes they pay the government, or only those among the public who actually use the
road through the toll fees they pay upon using the road. The tollway system is even a more efficient and
equitable manner of taxing the public for the maintenance of public roads.
The Airport Lands and Buildings of MIAA, which its Charter calls the "principal airport of the Philippines for
both international and domestic air traffic," 22 are properties of public dominion because they are intended
for public use. As properties of public dominion, they indisputably belong to the State or the Republic of the
Philippines.
b. Airport Lands and Buildings are Outside the Commerce of Man

The Airport Lands and Buildings of MIAA are devoted to public use and thus are properties of public
dominion. As properties of public dominion, the Airport Lands and Buildings are outside the commerce of
man.
The Court has also ruled that property of public dominion, being outside the commerce of man, cannot be
the subject of an auction sale. 25
Properties of public dominion, being for public use, are not subject to levy, encumbrance or disposition
through public or private sale. Any encumbrance, levy on execution or auction sale of any property of public
dominion is void for being contrary to public policy. Essential public services will stop if properties of public
dominion are subject to encumbrances, foreclosures and auction sale. This will happen if the City of
Parañaque can foreclose and compel the auction sale of the 600-hectare runway of the MIAA for non-
payment of real estate tax.
Before MIAA can encumber 26 the Airport Lands and Buildings, the President must first withdraw from
public use the Airport Lands and Buildings.
c. MIAA is a Mere Trustee of the Republic

MIAA is merely holding title to the Airport Lands and Buildings in trust for the Republic. Section 48, Chapter
12, Book I of the Administrative Code allows instrumentalities like MIAA to hold title to real properties
owned by the Republic, thus:
SEC. 48.Official Authorized to Convey Real Property. — Whenever real property of the Government is
authorized by law to be conveyed, the deed of conveyance shall be executed in behalf of the government
by the following:
(1)For property belonging to and titled in the name of the Republic of the Philippines, by the President,
unless the authority therefor is expressly vested by law in another officer.
(2)For property belonging to the Republic of the Philippines but titled in the name of any political subdivision
or of any corporate agency or instrumentality, by the executive head of the agency or instrumentality.
(Emphasis supplied)
In MIAA's case, its status as a mere trustee of the Airport Lands and Buildings is clearer because even its
executive head cannot sign the deed of conveyance on behalf of the Republic. Only the President of the
Republic can sign such deed of conveyance. 28
The transfer of the Airport Lands and Buildings from the Bureau of Air Transportation to MIAA was not
meant to transfer beneficial ownership of these assets from the Republic to MIAA. The purpose was merely
to reorganize a division in the Bureau of Air Transportation into a separate and autonomous body. The
Republic remains the beneficial owner of the Airport Lands and Buildings. MIAA itself is owned solely by the
Republic. No party claims any ownership rights over MIAA's assets adverse to the Republic.
The MIAA Charter expressly provides that the Airport Lands and Buildings "shall not be disposed through
sale or through any other mode unless specifically approved by the President of the Philippines." This only
means that the Republic retained the beneficial ownership of the Airport Lands and Buildings because under
Article 428 of the Civil Code, only the "owner has the right to . . . dispose of a thing." Since MIAA cannot
dispose of the Airport Lands and Buildings, MIAA does not own the Airport Lands and Buildings.

e. Real Property Owned by the Republic is Not Taxable
Section 234(a) of the Local Government Code exempts from real estate tax any "[r]eal property owned by
the Republic of the Philippines." Section 234(a) provides:
SEC. 234.Exemptions from Real Property Tax. — The following are exempted from payment of the real
property tax:
(a)Real property owned by the Republic of the Philippines or any of its political subdivisions except when
the beneficial use thereof has been granted, for consideration or otherwise, to a taxable person;
xxx xxx xxx. (Emphasis supplied)
This exemption should be read in relation with Section 133(o) of the same Code, which prohibits local
governments from imposing "[t]axes, fees or charges of any kind on the National Government, its agencies
and instrumentalities . . . ."
3.Refutation of Arguments of Minority
The minority asserts that the MIAA is not exempt from real estate tax because Section 193 of the Local
Government Code of 1991 withdrew the tax exemption of "all persons, whether natural or juridical" upon
the effectivity of the Code. Section 193 provides:
SEC. 193.Withdrawal of Tax Exemption Privileges — Unless otherwise provided in this Code, tax exemptions
or incentives granted to, or presently enjoyed by all persons, whether natural or juridical, including
government-owned or controlled corporations, except local water districts, cooperatives duly registered
under R.A. No. 6938, non-stock and non-profit hospitals and educational institutions are hereby withdrawn
upon effectivity of this Code. (Emphasis supplied) ESacHC
The minority states that MIAA is indisputably a juridical person. The minority argues that since the Local
Government Code withdrew the tax exemption of all juridical persons, then MIAA is not exempt from real
estate tax. Thus, the minority declares:
It is evident from the quoted provisions of the Local Government Code that the withdrawn exemptions from
realty tax cover not just GOCCs, but all persons. To repeat, the provisions lay down the explicit proposition
that the withdrawal of realty tax exemption applies to all persons. The reference to or the inclusion of GOCCs
is only clarificatory or illustrative of the explicit provision.
The term "All persons" encompasses the two classes of persons recognized under our laws, natural and
juridical persons. Obviously, MIAA is not a natural person. Thus, the determinative test is not just whether
MIAA is a GOCC, but whether MIAA is a juridical person at all. (Emphasis and underscoring in the original)
The minority's theory violates Section 133(o) of the Local Government Code which expressly prohibits local
governments from imposing any kind of tax on national government instrumentalities. Section 133(o) does
not distinguish between national government instrumentalities with or without juridical personalities.
Where the law does not distinguish, courts should not distinguish. Thus, Section 133(o) applies to all national
government instrumentalities, with or without juridical personalities. The determinative test whether MIAA
is exempt from local taxation is not whether MIAA is a juridical person, but whether it is a national
government instrumentality under Section 133(o) of the Local Government Code. Section 133(o) is the
specific provision of law prohibiting local governments from imposing any kind of tax on the national
government, its agencies and instrumentalities.
The exception to the exemption in Section 234(a) is the only instance when the national government, its
agencies and instrumentalities are subject to any kind of tax by local governments. The exception to the
exemption applies only to real estate tax and not to any other tax. The justification for the exception to the
exemption is that the real property, although owned by the Republic, is not devoted to public use or public
service but devoted to the private gain of a taxable person.
----
To summarize, MIAA is not a government-owned or controlled corporation under Section 2(13) of the
Introductory Provisions of the Administrative Code because it is not organized as a stock or non-stock
corporation. Neither is MIAA a government-owned or controlled corporation under Section 16, Article XII
of the 1987 Constitution because MIAA is not required to meet the test of economic viability. MIAA is a
government instrumentality vested with corporate powers and performing essential public services
pursuant to Section 2(10) of the Introductory Provisions of the Administrative Code. As a government
instrumentality, MIAA is not subject to any kind of tax by local governments under Section 133(o) of the
Local Government Code. The exception to the exemption in Section 234(a) does not apply to MIAA because
MIAA is not a taxable entity under the Local Government Code. Such exception applies only if the beneficial
use of real property owned by the Republic is given to a taxable entity.
Finally, the Airport Lands and Buildings of MIAA are properties devoted to public use and thus are properties
of public dominion. Properties of public dominion are owned by the State or the Republic. Article 420 of the
Civil Code provides:
Art. 420.The following things are property of public dominion:
(1)Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges constructed by
the State, banks, shores, roadsteads, andothers of similar character;
(2)Those which belong to the State, without being for public use, and are intended for some public service
or for the development of the national wealth. (Emphasis supplied)
The term "ports . . . constructed by the State" includes airports and seaports. The Airport Lands and Buildings
of MIAA are intended for public use, and at the very least intended for public service. Whether intended for
public use or public service, the Airport Lands and Buildings are properties of public dominion. As properties
of public dominion, the Airport Lands and Buildings are owned by the Republic and thus exempt from real
estate tax under Section 234(a) of the Local Government Code.
4.Conclusion
Under Section 2(10) and (13) of the Introductory Provisions of the Administrative Code, which governs the
legal relation and status of government units, agencies and offices within the entire government machinery,
MIAA is a government instrumentality and not a government-owned or controlled corporation. Under
Section 133(o) of the Local Government Code, MIAA as a government instrumentality is not a taxable person
because it is not subject to "[t]axes, fees or charges of any kind" by local governments. The only exception

is when MIAA leases its real property to a "taxable person" as provided in Section 234(a) of the Local
Government Code, in which case the specific real property leased becomes subject to real estate tax. Thus,
only portions of the Airport Lands and Buildings leased to taxable persons like private parties are subject to
real estate tax by the City of Parañaque.
Under Article 420 of the Civil Code, the Airport Lands and Buildings of MIAA, being devoted to public use,
are properties of public dominion and thus owned by the State or the Republic of the Philippines. Article
420 specifically mentions "ports . . . constructed by the State," which includes public airports and seaports,
as properties of public dominion and owned by the Republic. As properties of public dominion owned by
the Republic, there is no doubt whatsoever that the Airport Lands and Buildings are expressly exempt from
real estate tax under Section 234(a) of the Local Government Code. This Court has also repeatedly ruled
that properties of public dominion are not subject to execution or foreclosure sale.
WHEREFORE, we GRANT the petition. We SET ASIDE the assailed Resolutions of the Court of Appeals of 5
October 2001 and 27 September 2002 in CA-G.R. SP No. 66878. We DECLARE the Airport Lands and Buildings
of the Manila International Airport Authority EXEMPT from the real estate tax imposed by the City of
Parañaque. We declare VOID all the real estate tax assessments, including the final notices of real estate tax
delinquencies, issued by the City of Parañaque on the Airport Lands and Buildings of the Manila International
Airport Authority, except for the portions that the Manila International Airport Authority has leased to
private parties. We also declare VOID the assailed auction sale, and all its effects, of the Airport Lands and
Buildings of the Manila International Airport Authority
22. PHILIPPINE PORTS AUTHORITY VS. CITY OF ILOILO (GR NO. 109791)
Facts: Petitioner Philippine Ports Authority (PPA) is asking the court on Petition for Review on Certiorari to
set aside the ruling ordering it to pay real property and business taxes to respondent City of Iloilo.
The City of Iloilo filed an action for recovery of sum of money against PPA, a government corporation,
seeking to collect real property taxes as well as business taxes, computed from the last quarter of 1984 to
the fourth quarter of 1988.
It was alleged that the PPA is engaged in the business of arrastre services, stevedoring services, leasing
of real estate (its buildings to private persons), and a registered owner of a warehouse which is used in the
operation of its business. From these, PPA was alleged to be obligated to pay business taxes and real
property taxes.
The Regional Trial Court (RTC) of Iloilo held PPA liable for the payment of real property taxes and for
business taxes. However, it held that the City of Iloilo may not collect business taxes on PPA’s arrastre and
stevedoring services, as these form part of PPA’s governmental functions.
The following issues were raised on appeal:
1. Whether or not the RTC erred in decreeing a property of public dominion (port facility) as subject
to realty taxes just because the mentioned property is being administered by what it perceives to be a
taxable government corporation.
2. Whether or not the petitioner is subject to business taxes for leasing to private entities real estate
without considering that the petitioner is not engaged in business.

The City countered by stating in its Comment that PPA changed its theory of the case on appeal citing
that the allegation regarding the subject property as public dominion which was never raised during trial
nor in its memorandum filed with the lower court.
Issues:
WON a party can change its theory of the case on appeal.
WON improvements (warehouse) introduced by PPA on public properties (the port) are exempted from tax.
WON the income earned by leasing the property to private persons is also subject to tax
Held:
1) No. Cannot be changed.
As a rule, a party who deliberately adopts a certain theory upon which the case is tried and decided by the
lower court will not be permitted to change theory on appeal. Points of law, theories, issues and arguments
not brought to the attention of the lower court need not be, and ordinarily will not be, considered by a
reviewing court, as these cannot be raised for the first time at such late stage. However, there is an
exception to the rule as enunciated in Lianga Lumber Co. vs. Lianga Timber Co. Inc., 76 SCRA 197, where the
court said;
“In the interest of justice and within the sound discretion of the appellate court, a party may
change theory on appeal only when the factual bases thereof would not require presentation of any
further evidence by the adverse party in order to enable it to properly meet the issue raised in the
new theory.”
But this exception is not applicable in this case.
It is also noted that the PPA failed to raise the issue of ownership during the pre-trial. The pretrial is primarily
intended to make certain that all issues necessary to the disposition of the case are properly raised.
Consequently, the determination of issues at a pre-trial conference bars the consideration of other
questions on appeal. In the case at bar, the fact that the issue of ownership is outside of what has been
delimited during the pre-trial further justifies the disallowance of PPA’s new theory. Hence, PPA may not be
permitted to change its theory on appeal.
2) No. Not exempted.
It must be emphasized that the enumeration of properties of public dominion under Article 420 of the New
Civil Code specifically states “ports” constructed by the State. Thus, in order to consider the port in this case
as falling under the said classification, the fact that the port was constructed by the State must first be
established by sufficient evidence. Here, there was no proof adduced to establish that the port was
constructed by the State, hence, the court cannot just automatically conclude that the property is of public
dominion.
Granting that the petitioner’s present theory is allowed (that the port belongs to public domain), the court
still found its contentions untenable. It must be stressed that what is being taxed in the present case is PPA’s
warehouse, which, although located within the port is distinct from the port itself.
Considering the warehouse’s separable nature as an improvement upon the port, and the fact that it is not
open for use by everyone and freely accessible to the public, it is not part of the port as stated in Article 420
of the Civil Code. In the same way that it was ruled that the exemption of public property from taxation
does not extend to improvements made thereon by homesteaders or occupants at their own expense. Also,
it was held that the taxability of the warehouse in this case, it being a mere improvement built on an alleged
property of public dominion.
3) Yes. Taxable.
As regards the second issue raised by PPA regarding the lease of its property to private persons, the Court
ruled that its own admission that it leases out to private persons for convenience and not necessarily as part
of its governmental function of administering port operations is an admission that the act was a corporate
power, which, is actually expressly stated as so in its charter. Any income or profit generated by an entity,
even of a corporation organized without any intention of realizing profit in the conduct of its activities, is
subject to tax (CIR vs. CA, 329 SCRA 237). What matters is the established fact that it leased out it’s building
to private entities from which it regularly earned substantial income. Thus, in the absence of any proof of
exemption therefrom, PPA is declared liable for the assessed business taxes.
The petition is denied.
23. PHILIPPINE FISHERIES DEVELOPMENT AUTHORITY VS. CA (GR NO. 169836)
Facts: The controversy arose when respondent Municipality of Navotas assessed the real estate taxes
allegedly due from petitioner Philippine Fisheries Development Authority (PFDA) for the period 1981-1990
on properties under its jurisdiction, management and operation located inside the Navotas Fishing Port
Complex (NFPC).
The assessed taxes had remained unpaid despite the demands made by the municipality which
prompted it, through Municipal Treasurer Florante M. Barredo, to give notice to petitioner on October 29,
1990 that the NFPC will be sold at public auction on November 30, 1990 in order that the municipality will
be able to collect on petitioner’s delinquent realty taxes which, as of June 30, 1990, amounted to
P23,128,304.51, inclusive of penalties.
Petitioner sought the deferment of the auction sale claiming that the NFPC is owned by the Republic
of the Philippines, and pursuant to Presidential Decree (P.D.) No. 977, it (PFDA) is not a taxable entity.
In view of the refusal of PFDA to pay the assessed realty taxes, the matter was referred to the Department
of Finance (DOF). On July 14, 1990 the DOF stated that:
This Department takes cognizance of the allegations of [the Office of the Mayor of Navotas] that PFDA has
leased its properties to beneficial users, such as “businessmen, private persons and entities who are taxable
persons.” For this reason, it is imperative that the Municipality should conduct an ocular inspection on the
real properties (land and building owned by PFDA) in order to identify the properties actually leased and
the taxable persons enjoying the beneficial use thereof. The ocular inspection is necessary for reason that
the real properties, the use of which has been granted to taxable persons, for consideration or otherwise,
are subject to the payment of real property taxes which must be paid by the grantees pursuant to the
provisions … of the Real Property Tax Code, as amended.

… Therefore, it is imperative to determine who the actual users of the properties concerned [are]. If used
by a non-taxable person other than PFDA itself, it remains to be non-taxable. Otherwise, if said properties
are being used by taxable persons, same becomes taxable properties. For this purpose, it is also incumbent
upon PFDA to furnish the Municipality copies of the deed of lease or other relevant documents showing the
leased properties and their beneficial users for proper assessment.
Notwithstanding the DOF’s instruction, respondent Municipality proceeded to publish the notice of sale of
NFPC in the November 2, 1990 issue of Balita, a local newspaper.
Petitioner instituted a Civil Case in the Regional Trial Court (RTC) of Malabon, Metro Manila against
respondent Municipality, its Municipal Treasurer and the Chairman of the Public Auction Sale Committee.
Petitioner asked the RTC to enjoin the auction of the NFPC on the ground that the properties comprising
the NFPC are owned by the Republic of the Philippines and are, thus, exempt from taxation. According to
petitioner, only a small portion of NFPC which had been leased to private parties may be subjected to real
property tax which should be paid by the latter.
Respondent Municipality insisted that:
1) the real properties within NFPC are owned entirely by petitioner which, despite the opportunity given,
had failed to submit proof to the Municipal Assessor that the properties are indeed owned by the Republic
of the Philippines;
2) if the properties in question really belong to the government, then the complaint should have been
instituted in the name of the Republic of the Philippines, represented by the Office of the Solicitor General;
and
3) the complaint is fatally defective because of non-compliance with a condition precedent, which is,
payment of the disputed tax assessment under protest.
Issues:
(1) Is PFDA liable to pay real property tax?
(2) Is IPFC a property of public dominion thus cannot be auctioned?
Held:
(1) Yes. As a rule, petitioner PFDA, being an instrumentality of the national government, is exempt from real
property tax but the exemption does not extend to the portions of the NFPC (Navotas Fishing Port Complex)
that were leased to taxable or private persons and entities for their beneficial use.
PFDA is not a GOCC but an INSTRUMENTALITY of the government thus generally EXEMPTED from payment
of real property tax. PFDA is characterized as not a Govt Owned and Controlled Corp. (GOCC) on the basis
of the MIAA vs. CA which stated that for one to be a GOCC two reqs must concur: (1) that it has capital stock
divided into shares, and (2) that it is authorized to distribute dividends and allotments of surplus and profits
to its stockholders; which is absent in the case at bar. Pursuant to Sec. 133 (o) of LGC, instrumentalities of

the national government, like MIAA, are exempt from local taxes. However, submits of an exception, Section
234 (a) of the LGC, the Court ruled that when an instrumentality of the national government grants to a
taxable person the beneficial use of a real property owned by the Republic, said instrumentality becomes
liable to pay real property tax. The Authority should be classified as an instrumentality of the national
government which is liable to pay taxes only with respect to the portions of the property, the beneficial use
of which were vested in private entities. The real property tax assessments issued by the City of Iloilo should
be upheld only with respect to the portions leased to private persons.
(2) Yes. The IFPC which was constructed by the State for public use and/or public service falls within the
term “port” in the aforecited provision. Being a property of public dominion the same cannot be subject to
execution or foreclosure sale. It cannot be auctioned in case PDF fails to pay real property tax due them.
Taking basis from Chavez vs. PEA, reclaimed lands are lands of public domain and thus cannot be subject of
sale , WITHOUT CONGRESSIONAL authorization. SC said, “In the same vein, the port built by the State in the
Iloilo fishing complex is a property of the public dominion and cannot therefore be sold at public auction.”
24. PRA vs. City of Paranaque (191109)

• This is a petition for review on certiorari assailing the Order of the Regional Trial Court, Branch 195,
Paranaque City (RTC), which ruled that petitioner Philippine Reclamation Authority (PRA) is a government-
owned and controlled corporation (GOCC), a taxable entity, and, therefore, not exempt from payment of real
property taxes.
• The Public Estates Authority (PEA) (which was later transformed to PRA by Gloria) is a government
corporation created by virtue of P.D. No. 1084 to provide a coordinated, economical and efficient reclamation of
lands, and the administration and operation of lands belonging to, managed and/or operated by, the
government with the object of maximizing their utilization and hastening their development consistent with
public interest.
• By virtue of its mandate, PRA reclaimed several portions of the foreshore and offshore areas of Manila
Bay, including those located in Parañaque City. Parañaque City Treasurer issued Warrants of Levy on PRA’s
reclaimed properties based on the assessment for delinquent real property for tax years 2001 and 2002.
PRA asserted that:
• It is not a GOCC under the Administrative Code, nor is it a GOCC under Section 16, Article XII of the 1987
Constitution because it is not required to meet the test of economic viability (meaning: the purpose behind the
creation must be for economic or commercial activities).
• It is a government instrumentality vested with corporate powers and performing an essential public
service. Although it has a capital stock divided into shares, it may not be classified as a stock corporation
because it lacks the second requisite of a stock corporation: to distribute dividends and allotment of surplus and
profits to its stockholders.
• It may not be classified as a non-stock corporation because it has no members and it is not organized for
charitable, religious, educational, professional, cultural, recreational, fraternal, literary, scientific, social, civil
service, or similar purposes, like trade, industry, agriculture and like chambers as provided in Section 88 of the
Corporation Code.
• It was not created to compete in the market place as there was no competing reclamation company
operated by the private sector. Also, while PRA is vested with corporate powers under P.D. No. 1084, such
circumstance does not make it a corporation but merely an incorporated instrumentality and that the mere fact
that an incorporated instrumentality of the National Government holds title to real property does not make said
instrumentality a GOCC.
City of Parañaque (respondent) argued that:
• PRA since its creation consistently represented itself to be a GOCC. PRA’s very own charter (P.D. No.
1084) declared it to be a GOCC and that it has entered into several thousands of contracts where it represented
itself to be a GOCC. In fact, PRA admitted in its original and amended petitions and pre-trial brief filed with the
RTC of Parañaque City that it was a GOCC.
• It argues that PRA is a stock corporation with an authorized capital stock divided into 3 million no par
value shares, out of which 2 million shares have been subscribed and fully paid up. Section 193 of the LGC of
1991 has withdrawn tax exemption privileges granted to or presently enjoyed by all persons, whether natural or
juridical, including GOCCs.
ISSUE:
Whether or not petitioner is an incorporated instrumentality of the national government and is, therefore,
exempt from payment of real property tax under sections 234(a) and 133(o) of Republic Act 7160 or the Local
Government Code vis-à-vis Manila International Airport Authority v. Court of Appeals.
HELD:
Yes, it is a Government Instrumentality and not a GOCC. When the law vests a government instrumentality
corporate powers, the instrumentality does not necessarily become a corporation. Unless the government
instrumentality is organized as a stock or non-stock corporation, it remains a government instrumentality
exercising not only governmental but also corporate powers.
Introductory Provisions of the Administrative Code of 1987 defines a GOCC as any agency organized as a stock or
non-stock corporation, vested with functions relating to public needs whether governmental or proprietary in
nature, and owned by the Government directly or through its instrumentalities either wholly, or, where
applicable as in the case of stock corporations, to the extent of at least fifty-one (51) percent of its capital stock:
x x x.
From the above definitions, it is clear that a GOCC must be "organized as a stock or non-stock corporation" while
an instrumentality is vested by law with corporate powers. Likewise, when the law makes a government
instrumentality operationally autonomous, the instrumentality remains part of the National Government
machinery although not integrated with the department framework.

Many government instrumentalities are vested with corporate powers but they do not become stock or non-
stock corporations, which is a necessary condition before an agency or instrumentality is deemed a GOCC.
The fundamental provision above authorizes Congress to create GOCCs through special charters on two
conditions: 1) the GOCC must be established for the common good; and 2) the GOCC must meet the test of
economic viability. In this case, PRA may have passed the first condition of common good but failed the second
one - economic viability. Undoubtedly, the purpose behind the creation of PRA was not for economic or
commercial activities. Neither was it created to compete in the market place considering that there were no
other competing reclamation companies being operated by the private sector.
Further, when local governments invoke the power to tax on national government instrumentalities, such power
is construed strictly against local governments. The rule is that a tax is never presumed and there must be clear
language in the law imposing the tax. Any doubt whether a person, article or activity is taxable is resolved
against taxation. This rule applies with greater force when local governments seek to tax national government
instrumentalities.
Another rule is that a tax exemption is strictly construed against the taxpayer claiming the exemption. However,
when Congress grants an exemption to a national government instrumentality from local taxation, such
exemption is construed liberally in favor of the national government instrumentality.
Summary: This Court is convinced that PRA is not a GOCC either under Section 2(3) of the Introductory
Provisions of the Administrative Code or under Section 16, Article XII of the 1987 Constitution. The facts, the
evidence on record and jurisprudence on the issue support the position that PRA was not organized either as a
stock or a non-stock corporation. Neither was it created by Congress to operate commercially and compete in
the private market. Instead, PRA is a government instrumentality vested with corporate powers and performing
an essential public service pursuant to Section 2(10) of the Introductory Provisions of the Administrative Code.
Being an incorporated government instrumentality, it is exempt from payment of real property tax.
25. Jean Tan vs. RP (193443)
23. IDEALS VS. PSALM (GR NO. 192088)

FACTS:
Respondent Power Sector Assets and Liabilities Management Corporation (PSALM) is a GOCC created by virtue
of Republic Act No. 9136, otherwise known as the “Electric Power Industry Reform Act of 2001” (EPIRA). Said law
mandated PSALM to manage the orderly sale, disposition, and privatization of NPC generation assets, real estate
and other disposable assets, and Independent Power Producer (IPP) contracts with the objective of liquidating all
NPC financial obligations and stranded contract costs in an optimal manner, which liquidation is to be completed
within PSALM’s 25-year term of existence.
In August 2005, PSALM commenced the privatization of the 246-megawatt (MW) Angat Hydro-electric Power Plant
(AHEPP), forming part of the Angat Complex, which includes the Angat Dam, Angat Reservoir and the outlying
watershed area. This is partly owned by respondent Metropolitan Waterworks and Sewerage System (MWSS). The
Angat Dam and AHEPP are utilized for power generation, irrigation, water supply and flood control purposes.
Because of its multi-functional design, the operation of the Angat Complex involves various government agencies,
namely: (1) NPC; (2) National Water Resources Board (NWRB); (3) MWSS; (4) respondent National Irrigation
Administration (NIA); and (5) Philippine Atmospheric, Geophysical and Astronomical Services Administration (PAG-
ASA).
On December 15, 2009, PSALM’s Board of Directors approved the Bidding Procedures for the privatization of the
AHEPP. The two auxiliary units owned by MWSS were excluded from the bid. Pertinent portions of the Bidding
Package include: “The priority of water usage under Philippine Law would have to be observed by the
Buyer/Operator. The Winning Bidder/Buyer shall be requested to enter into an operations and maintenance
agreement with PSALM for the Non-Power Components…the Buyer will be required to enter into the said water
protocol agreement as a condition to the award of the Asset.”
Korea Water Resources Corporation (K-Water) had the winning bid and was consequently given the Notice of
Award.
The present petition was filed by the Initiatives for Dialogue and Empowerment Through Alternative Legal Services,
Inc. (IDEALS), Freedom from Debt Coalition (FDC), AKBAYAN Citizen’s Action Party (AKBAYAN) and Alliance of
Progressive Labor, seeking to permanently enjoin the sale of the AHEPP to K-Water. SC issued Status Quo Ante
Order.
ARGUMENTS
PETITIONERS RESPONDENTS
Right to information violated → PSALM did not release Conducted the bidding in an open and transparent
to the public critical information regarding the bidding manner, through a series of events in accordance with
the governing rules on public bidding --> IDEALS’
request for information about the winning bidder, as
contained in its letter dated May 14, 2010, the same was
already referred to respondent K-Water’s counsel for
appropriate action
PSALM violated CC 498 → PSALM did not offer the MWSS’s contribution in the funds used for the
sale of AHEPP to MWSS, its co-owner, before selling construction of the AHEPP did not give rise to a regime
to an outsider of co-ownership as the said funds were merely in
exchange for the supply of water that MWSS would get
from the Angat Dam
PSALM violated Consti and Water Code → K-Water is The utilization of water by a hydroelectric power plant
a foreign corporation does not constitute appropriation of water from its natural
source considering that the source of water (dam) that
NPC gives up its authority to extract or utilize water enters the intake gate of the power plant is an artificial
from the Angat River structure
Right to water was violated by bidding process → State PSALM is mindful of the State’s duty to protect the
has an obligation to ensure water security for its people public’s right to water when it sold the AHEPP. In fact,
such concern as taken into consideration by PSALM in
Angat Dam provides 97% of Metro Manila's water --> devising a privatization scheme for the AHEPP whereby
PSALM should prioritize domestic use of water over the water allocation is continuously regulated by the
power generation NWRB and the dam and its spillway gates remain under
the ownership and control of NPC
MWSS (respondent, but seems to side with P)

1) MWSS has supervision and control over the Angat Dam given that the Angat Reservoir supplies
approximately 97% of the water requirements of Metro Manila. MWSS has incurred expenses to maintain
their upkeep, improve and upgrade their facilities.
2) After the enactment of EPIRA, MWSS had expressed the desire to acquire ownership and control of the
AHEPP so as not to leave the operation of the Angat Reservoir to private discretion that may prejudice the
water allocation to MWSS as dictated by NWRB rules.
3) The AHEPP is in dire danger of being wholly-owned by a Korean corporation which probably merely
considers it as just another business opportunity
ISSUES:
3) WON privatization of the power generation process of AHEPP amounted to a violation of Sec. 2, Art. XII of the
Constitution
4) WON it violated Water Code provisions on the grant of water rights
HELD
3) & 4) The Water Code limits the grant of water rights only to Filipino citizens and juridical entities duly qualified by
law to exploit and develop water resources, including private corporations with sixty percent of their capital owned
by Filipinos. In the case of Angat River, the NWRB has issued separate water permits to MWSS, NPC and NIA.
Under the EPIRA, the generation of electric power, a business affected with public interest, was opened to private
sector. Power generation shall not be considered a public utility operation, and hence no franchise is necessary.
Foreign investors are likewise allowed entry into the electric power industry. However, there is no mention of water
rights in the privatization of multi-purpose hydropower facilities.
Operation of a Hydroelectric Power Plant

Hydroelectric energy is produced by the force of falling water. The capacity to produce this energy is
dependent on both the available flow and the height from which it falls. Building up behind a high dam,
water accumulates potential energy. This is transformed into mechanical energy when the water rushes
down the sluice and strikes the rotary blades of turbine. The turbine's rotation spins electromagnets which
generate current in stationary coils of wire. Finally, the current is put through a transformer where the
voltage is increased for long distance transmission over power lines.
Under the Water Code concept of appropriation, a foreign company may not be said to be “appropriating” our natural
resources if it utilizes the waters collected in the dam and converts the same into electricity through artificial devices.
Since the NPC remains in control of the operation of the dam by virtue of water rights granted to it, there is no legal
impediment to foreign-owned companies undertaking the generation of electric power using waters already
appropriated by NPC, the holder of water permit.
There is no provision in the EPIRA itself authorizing the NPC to assign or transfer its water rights in case of transfer
of operation and possession of multi-purpose hydropower facilities. Since only the power plant is to be sold and
privatized, the operation of the non-power components such as the dam and reservoir, including the maintenance
of the surrounding watershed, should remain under the jurisdiction and control of NPC which continue to be a
government corporation. There is therefore no necessity for NPC to transfer its permit over the water rights to K-
Water. Pursuant to its purchase and operation/management contracts with K-Water, NPC may authorize the latter
to use water in the dam to generate electricity.
NPC shall continue to be the holder of the water permit even as the operational control and day-to-day
management of the AHEPP is turned over to K-Water under the terms and conditions of their APA and O & M
Agreement, whereby NPC grants authority to K-Water to utilize the waters diverted or collected in the Angat Dam
for hydropower generation. Further, NPC and K-Water shall faithfully comply with the terms and conditions of the
Memorandum of Agreement on Water Protocol, as well as with such other regulations and issuances of the
NWRB governing water rights and water usage
24. WOODRIDGE SCHOOL, INC. ET. AL. VS. ARB CONSTRUCTION INC. (GR NO. 157285)
Facts:
Javier, is the registered owner of the adjacent lot to that of Woodridge. Respondent ARB Construction is
the owner and developer of Soldiers Hills Subdivision in Bacoor, Cavite, which is composed of four phases.
Phase 1 of the subdivision was already accessible from the Marcos Alvarez Avenue. To provide the same

accessibility to the residents of Phase II of the subdivision, ARB constructed the disputed road to link the
two phases.
Petitioner’s properties sit right in the middle of several estates: Phase 1 of Soldiers Hills Subdivision in the
north, a creek in the east and Green Valley Subdivision in the farther east, a road within Soldiers Hills
Subdivision IV which leads to the Marcos Alvarez Avenue in the west, and Phase III of Soldiers Hills
Subdivision in the south. Petitioners offered to pay ARB P50,000 as indemnity for the use of the road. ARB
refused the offer and fenced the perimeter of the road fronting the properties of petitioners, thus, cutting
off petitioners’ access to and from the public highway.
After failing to settle the matter amicably, petitioners jointly filed a complaint in the RTC to enjoin ARB from
depriving them of the use of the disputed subdivision road and to seek a compulsory right of way after
payment of proper indemnity. The RTC rendered its decision in favor of petitioners relying on the ruling of
the Supreme Court in White Plains Association, Inc. vs. Legaspi (193 SCRA 765) stating that the government
automatically becomes the owner of the subdivisions’ roads the moment the subdivision plan is approved,
and thus is open to public use without any need for compensation.
Respondent ARB elevated the case to the Court of Appeals. The appellate court reversed the Trial Court’s
decision and stating that the ruling of the Supreme Court in the 1991 case of White Plains Subdivision is not
applicable as it was not similarly situated as in the present case. However the appellate court went on to
rule that a compulsory right of way exists in favor of petitioners as there is no other existing adequate outlet
to and from petitioners’ properties to the Marcos Alvarez Avenue other than the subject existing road lot
belonging to ARB. In addition, it awarded P500,000 to ARB as compensation for the wear and tear that
petitioners’ use of the road would contribute to.
Unsatisfied with the ruling of the appellate court, petitioners elevated the matter to the Supreme Court
arguing that ARB is not entitled to be paid any indemnity since the contested road lot is a property of public
dominion pursuant to Article 420 of the Civil Code because the disputed road falls under the category of
“others of similar character” which is the last clause of Article 420 (1). Hence, it is a property of public
dominion which can be used by the general public without need for compensation. Petitioners also assert
that their initial offer of P50,000 should be sufficient compensation for the right of way. Further, they
should not be held accountable for the increase in the value of the property since the delay was attributable
to the stubborn refusal of ARB to accept their offer.
Issues:
Whether the disputed road is a property of public dominion pursuant to the last clause of Article 420 (1),
and, as such, is not a valid subject for legal easement.
Whether the offer of petitioners amounting to P50,000 is a sufficient compensation for their use of the road.
Held:
1) No.
The Court held that the road lots in a private subdivision are private property, hence, the local government
should first acquire them by donation, purchase, or expropriation, if they are to be utilized as a public road.

Otherwise, they remain to be private properties of the owner developer. The use of the subdivision roads
by the general public does not strip it of its private character.
The road is not converted into public property by mere tolerance of the subdivision owner of the public's
passage through it. The local government should first acquire them by donation, purchase, or expropriation,
if they are to be utilized as a public road. In the present case, since no donation has been made in favor of
any local government and the title to the road lot is still registered in the name of ARB, the disputed property
remains private.
2) No.
In order to be entitled to a legal easement of right of way, the following requisites must concur:
(1) the dominant estate is surrounded by other immovables and has no adequate outlet to a public
highway;
(2) payment of proper indemnity;
(3) The isolation was not due to acts of the proprietor of the dominant estate and;
(4) the right of way claimed is at the point least prejudicial to the servient estate.
In the present case, all of the requisites are present except for number two. The appellate and trial courts
found that the properties of petitioners are enclosed by other estates without any adequate access to a
public highway except the subject road lot which leads to Marcos Alvarez Avenue. Although it was shown
that the shortest distance from the properties to the highway is toward the east across a creek, this
alternative route does not provide an adequate outlet for the students of the proposed school. The Civil
Code categorically provides for the measure by which the proper indemnity may be computed. Under Article
649, paragraph 2, it is stated:
“Should this easement be established in such a manner that its use may be continuous for all the needs
of the dominant estate, establishing a permanent passage, the indemnity shall consist of the value of
the land occupied and the amount of the damage caused to the servient estate.”
Having settled the legal issues, the Supreme Court ordered the remand of the case to the trial court for the
reception of evidence and determination of the limits of the property to be covered by the easement, the
proper indemnity to be paid and the respective contributions of petitioners. The petition was PARTIALLY
GRANTED.
25. THE CITY OF ANGELES, ET. AL. VS. COURT OF APPEALS (GR NO. 97882)
Facts:
Private Respondent, owner/developer of the Timog Park Subdivision in Angeles City donated 51 parcels of
land with an aggregate area of 50,676 sq. meters (more or less) with a condition that the said lots shall be
devoted and utilized solely for the site of the Angeles City Sports Center, excluding cockfighting, where any
change/modification in the basic design or concept of the Sports Center must have prior written consent
from the Donor. It was also stipulated that any substantial breach of the foregoing provisos shall entitle the
DONOR to revoke or rescind this Deed of Donation, and in such eventuality, the DONEE agrees to vacate

and return the premises, together with all improvements, to the DONOR peacefully without necessity of
judicial action.
Petitioners started the construction of a drug rehabilitation center which the private respondent protested
such action for being violative of the terms and conditions of the donation.
Issue:
• Whether a subdivision owner/developer is legally bound under Presidential Decree No. 1216 to donate to
the city or municipality the "open space" allocated exclusively for parks, playground and recreational use.
• Whether the donation by of the "open space" of its subdivision in favor of petitioner City of Angeles may
be revoked for alleged violation of the Amended Deed of Donation.
Held:
A. Developer legally bound to donate open space
• Sec. 31 of P.D. 957, after it has been amended, in its last paragraph:
o "Upon their completion . . ., the roads, alleys, sidewalks and playgrounds shall be donated by the owner
or developer to the city or municipality and it shall be mandatory for the local government to accept;
provided, however, that the parks and playgrounds may be donated to the Homeowners Association of the
project with the consent of the city or municipality concerned. . . ."
• It is clear from the aforequoted amendment that it is no longer optional on the part of the subdivision
owner/developer to donate the open space for parks and playgrounds; rather there is now a legal obligation
to donate the same. Although there is a proviso that the donation of the parks and playgrounds may be
made to the homeowners association of the project with the consent of the city of municipality concerned,
nonetheless, the owner/developer is still obligated under the law to donate. Such option does not change
the mandatory character of the provision. The donation has to be made regardless of which donee is picked
by the owner/developer.
B.Impositions of Conditions in Donation of Open Space
• The general law on donations does not prohibit the imposition of conditions on a donation so long as the
conditions are not illegal or impossible. It further declares that such open space devoted to parks,
playgrounds and recreational areas are non-alienable public land and non-buildable. However, there is no
prohibition in either P.D. 957 or P.D. 1216 against imposing conditions on such donation.
• We hold that any condition may be imposed in the donation, so long as the same is not contrary to law,
morals, good customs, public order or public policy.
• P.D. 1216 clearly requires that the 3.5% to 9% of the gross area allotted for parks and playgrounds is "non-
buildable", then the obvious question arises whether or not such condition was validly imposed and is
binding on the donee. It is clear that the "non-buildable" character applies only to the 3.5% to 9% area set
by law. If there is any excess land over and above the 3.5% to 9% required by the decree, which is also used
or allocated for parks, playgrounds and recreational purposes, it is obvious that such excess area is not
covered by the non-buildability restriction. In the instant case, if there be an excess, then the donee would
not be barred from developing and operating a sports complex thereon, and the condition in the amended
deed would then be considered valid and binding.
• The subdivision in question is a "medium-density or economic housing" subdivision based on the sizes of
the family lots donated in the amended deed, 14 for which category the decree mandates that not less than

7% of gross area be set aside. Since the donated land constitutes only a little more than 5% of the gross area
of the subdivision, which is less than the area required to be allocated for non-buildable open space,
therefore there is no "excess land" to speak of. This then means that the condition to build a sports complex
on the donated land is contrary to law and should be considered as not imposed.
C. Revocation of a Mandatory Donation Because of Non-compliance with an illegal condition

• There is no legal basis whatsoever to revoke the donation of the subject open space and to return the
donated land to private respondent. The donated land should remain with the donee as the law clearly
intended such open spaces to be perpetually part of the public domain, non-alienable and permanently
devoted to public use as such parks, playgrounds or recreation areas.
26. FRANCISCO CHAVEZ VS. PUBLIC ESTATES AUTHORITY (GR NO. 133250)
This is an original Petition for Mandamus with prayer for a writ of preliminary injunction and a temporary
restraining order. The petition seeks to compel the Public Estates Authority ("PEA" for brevity) to disclose
all facts on PEA's then on-going renegotiations with Amari Coastal Bay and Development Corporation
("AMARI" for brevity) to reclaim portions of Manila Bay. The petition further seeks to enjoin PEA from
signing a new agreement with AMARI involving such reclamation.
On November 20, 1973, the government, through the Commissioner of Public Highways, signed a contract
with the Construction and Development Corporation of the Philippines ("CDCP' for brevity) to reclaim
certain foreshore and offshore areas of Manila Bay. The contract also included the construction of Phases I
and II of the Manila-Cavite Coastal Road. CDCP obligated itself to carry out all the works in consideration of
fifty percent of the total reclaimed land.
On April 25, 1995, PEA entered into a Joint Venture Agreement ("JVA" for brevity) with AMARI, a private
corporation, to develop the Freedom Islands. The JVA also required the reclamation of an additional 250
hectares of submerged areas surrounding these islands to complete the configuration in the Master
Development Plan of the Southern Reclamation Project-MCCRRP. PEA and AMARI entered into the JVA
through negotiation without public bidding. 4 On April 28, 1995, the Board of Directors of PEA, in its
Resolution No. 1245, confirmed the JVA. 5 On June 8, 1995, then President Fidel V. Ramos, through then
Executive Secretary Ruben Torres, approved the JVA. 6
On November 29, 1996, then Senate President Ernesto Maceda delivered a privilege speech in the Senate
and denounced the JVA as the "grandmother of all scams." As a result, the Senate Committee on
Government Corporations and Public Enterprises, and the Committee on Accountability of Public Officers
and Investigations, conducted a joint investigation. The Senate Committees reported the results of their
investigation in Senate Committee Report No. 560 dated September 16, 1997. 7 Among the conclusions of
their report are: (1) the reclaimed lands PEA seeks to transfer to AMARI under the JVA are lands of the public
domain which the government has not classified as alienable lands and therefore PEA cannot alienate these
lands; (2) the certificates of title covering the Freedom Islands are thus void, and (3) the JVA itself is illegal.
On February 4, 1977, then President Ferdinand E. Marcos issued Presidential Decree No. 1084 creating PEA.
PD No. 1084 tasked PEA "to reclaim land, including foreshore and submerged areas," and "to develop,
improve, acquire, . . . lease and sell any and all kinds of lands." 1 On the same date, then President Marcos

issued Presidential Decree No. 1085 transferring to PEA the "lands reclaimed in the foreshore and offshore
of the Manila Bay " 2 under the Manila-Cavite Coastal Road and Reclamation Project (MCCRRP).
On December 29, 1981, then President Marcos issued a memorandum directing PEA to amend its contract
with CDCP, so that "[A]ll future works in MCCRRP . . . shall be funded and owned by PEA." Accordingly, PEA
and CDCP executed a Memorandum of Agreement dated December 29, 1981.
On April 27, 1998, petitioner Frank I. Chavez ("Petitioner" for brevity) as a taxpayer, filed the instant Petition
for Mandamus with Prayer for the Issuance of a Writ of Preliminary Injunction and Temporary Restraining
Order. Petitioner assails the sale to AMARI of lands of the public domain as a blatant violation of Section 3,
Article XII of the 1987 Constitution prohibiting the sale of alienable lands of the public domain to private
corporations.
ISSUE: WHETHER THE STIPULATIONS IN THE AMENDED JOINT VENTURE AGREEMENT FOR THE TRANSFER
TO AMARI OF CERTAIN LANDS, RECLAIMED AND STILL TO BE RECLAIMED, VIOLATE THE 1987 CONSTITUTION
HELD: NULL & VOID
We can now summarize our conclusions as follows;
1.The 157.84 hectares of reclaimed lands comprising the Freedom Islands, now covered by certificates of
title in the name of PEA, are alienable lands of the public domain. PEA may lease these lands to private
corporations but may not sell or transfer ownership of these lands to private corporations. PEA may only
sell these lands to Philippine citizens, subject to the ownership limitations in the 1987 Constitution and
existing laws.
2.The 592.15 hectares of submerged areas of Manila Bay remain inalienable natural resources of the public
domain until classified as alienable or disposable lands open to disposition and declared no longer needed
for public service. The government can make such classification and declaration only after PEA has reclaimed
these submerged areas. Only then can these lands qualify as agricultural lands of the public domain, which
are the only natural resources the government can alienate. In their present state, the 592.15 hectares of
submerged areas are inalienable and outside the commerce of man.
3.Since the Amended JVA seeks to transfer to AMARI, a private corporation, ownership of 77.34 hectares of
the Freedom Islands, such transfer is void for being contrary to Section 3, Article XII of the 1987 Constitution
which prohibits private corporations from acquiring any kind of alienable land of the public domain.
4.Since the Amended JVA also seeks to transfer to AMARI ownership of 290.156 hectares 111 of still
submerged areas of Manila Bay, such transfer is void for being contrary to Section 2, Article XII of the 1987
Constitution which prohibits the alienation of natural resources other than agricultural lands of the public
domain. PEA may reclaim these submerged areas. Thereafter, the government can classify the reclaimed
lands as alienable or disposable, and further declare them no longer needed for public service. Still, the
transfer of such reclaimed alienable lands of the public domain to AMARI will be void in view of Section 3,
Article XII of the 1987 Constitution which prohibits private corporations from acquiring any kind of alienable
land of the public domain.
Clearly the Amended JVA violates glaringly Sections 2 and 3, Article XII of the 1987 Constitution. under
Article 1409 112 of the Civil Code, contracts whose "object or purpose is contrary to law," or whose "object

is outside the commerce of men," are "inexistent and void from the beginning." The Court must perform its
duty to defend and uphold the Constitution, and therefore declares the Amended JVA null and void ab initio.
WHEREFORE, the petition is GRANTED. The Public Estates Authority and Amari Coastal Bay Development
Corporation are PERMANENTLY ENJOINED from implementing the Amended Joint Venture Agreement
which is hereby declared NULL and VOID ab initio.
27. FRANCISCO CHAVEZ VS. NATIONAL HOUSING AUTHORITY (GR NO. 164527)
Facts: Petitioner Francisco Chavez in his capacity as taxpayer seeks to declare null and void the Joint Venture
Agreement (JVA) between the NHA and R-II Builder’s Inc (RBI) for being unconstitutional and invalid, and to
enjoin respondents — particularly respondent NHA– from implementing and/or enforcing the said project
and other agreements related thereto. On March 1, 1988, then President Corazon C. Aquino issued
Memorandum Order No. 161 (MO 161) approving and directing the implementation of the Comprehensive
and Integrated Metropolitan Manila Waste Management Plan. Specifically, respondent NHA was ordered
to “conduct feasibility studies and develop low-cost housing projects at the dumpsite and absorb scavengers
in NHA resettlement/low-cost housing projects.”
Pursuant to MO 161-A, NHA prepared the feasibility studies which resulted in the formulation of the
Smokey Mountain Development Plan and Reclamation of the Area Across R-10 or the Smokey Mountain
Development and Reclamation Project (SMDRP). SMDRP aimed to convert the Smokey Mountain dumpsite
into a habitable housing project, inclusive of the reclamation of the area across R-10, adjacent to the Smokey
Mountain as the enabling component of the project. Once finalized, the Plan was submitted to President
Aquino for her approval.
On January 17, 1992, President Aquino proclaimed MO 415, approving and directing the
implementation of the SMDRP through a private sector joint venture. Said MO stipulated that the land area
covered by the Smokey Mountain dumpsite is conveyed to the NHA as well as the area to be reclaimed
across R-10. In the same MO 415, President Aquino created an Executive Committee (EXECOM) to oversee
the implementation of the Plan and an inter-agency technical committee (TECHCOM) was created
composed of the technical representatives of the EXECOM. Based on the evaluation of the pre-qualification
documents, the EXECOM declared the New San Jose Builders, Inc. and RBI as top two contractors.
Thereafter, TECHCOM submitted its recommendation to the EXECOM to approve the RBI proposal which
garnered the highest score.
On October 7, 1992, President Ramos authorized NHA to enter into a JVA with RBI. Afterwards,
President Ramos issued Proclamation No. 465 increasing the proposed area for reclamation across R-10
from 40 hectares to 79 hectares. On September 1, 1994, pursuant to Proclamation No. 39, the DENR issued
Special Patent No. 3591 conveying in favor of NHA an area of 211,975 square meters covering the Smokey
Mountain Dumpsite. The land reclamation was completed in August 1996. Sometime later in 1996, pursuant
likewise to Proclamation No. 39, the DENR issued Special Patent No. 3598 conveying in favor of NHA an
additional 390,000 square meter area. After some time, the JVA was terminated. RBI demanded the
payment of just compensation for all accomplishments and costs incurred in developing the SMDRP plus a
reasonable rate of return. In a Memorandum of Agreement (MOA) executed by NHA and RBI, both parties
agreed to terminate the JVA and other subsequent agreements, which stipulated, among others, that
unpaid balance may be paid in cash, bonds or through the conveyance of properties or any combination
thereof.
Issues:
1. Whether RBI can acquire reclaimed foreshore and submerged land areas because they are allegedly
inalienable lands of the public domain
2. Whether RBI can acquire reclaimed lands when there was no declaration that said lands are no longer
needed for public use.
3. Whether RBI, being a private corporation, is barred from the Constitution to acquire lands of the public
domain.
Held:
1. Yes. The reclaimed lands across R-10 were classified alienable and disposable lands of public domain
of the State. First, there were three presidential proclamations classifying the reclaimed lands across R-10
as alienable or disposable hence open to disposition or concession. These were MO 415 issued by President
Aquino, Proclamation No. 39 and Proclamation No. 465 both issued by President Ramos. Secondly, Special
Patents Nos. 3591, 3592, and 3598 issued by the DENR classified the reclaimed areas as alienable and
disposable.
Admittedly, it cannot be said that MO 415, Proclamations Nos. 39 and 465 are explicit declarations that
the lands to be reclaimed are classified as alienable and disposable. We find however that such conclusion
is derived and implicit from the authority given to the NHA to transfer the reclaimed lands to qualified
beneficiaries. In line with the ruling in Chavez v. PEA, the court held that MO 415 and Proclamations Nos.
39 and 465 cumulatively and jointly taken together with Special Patent Nos. 3591, 3592, and 3598 more
than satisfy the requirement in PEA that “[t]here must be a law or presidential proclamation officially
classifying these reclaimed lands as alienable or disposable and open to disposition or concession.”
2. Yes. Even if it is conceded that there was no explicit declaration that the lands are no longer needed
for public use or public service, there was however an implicit executive declaration that the reclaimed areas
R-10 are not necessary anymore for public use or public service. President Aquino through MO 415
conveyed the same to the NHA partly for housing project and related commercial/industrial development
intended for disposition to and enjoyment of certain beneficiaries and not the public in general and partly
as enabling component to finance the project. Also, President Ramos, in issuing Proclamation No. 39,
declared, though indirectly, that the reclaimed lands of the Smokey Mountain project are no longer required
for public use or service. In addition, President Ramos issued Proclamation No. 465 increasing the area to
be reclaimed from forty (40) hectares to seventy-nine (79) hectares, elucidating that said lands are
undoubtedly set aside for the beneficiaries of SMDRP and not the public. MO 415 and Proclamations Nos.
39 and 465 are declarations that proclaimed the non-use of the reclaimed areas for public use or service as
the SMDRP cannot be successfully implemented without the withdrawal of said lands from public use or
service.
3. Yes. When Proclamations Nos. 39 and 465 were issued, inalienable lands covered by said proclamations
were converted to alienable and disposable lands of public domain. When the titles to the reclaimed lands

were transferred to the NHA, said alienable and disposable lands of public domain were automatically
classified as lands of the private domain or patrimonial properties of the State because the NHA is an agency
NOT tasked to dispose of alienable or disposable lands of public domain. The only way it can transfer the
reclaimed land in conjunction with its projects and to attain its goals is when it is automatically converted
to patrimonial properties of the State. Being patrimonial or private properties of the State, then it has the
power to sell the same to any qualified person—under the Constitution, Filipino citizens as private
corporations, 60% of which is owned by Filipino citizens like RBI.
28. ESTATE OF YUJUICO VS. REPUBLIC (GR NO. 168661)
Facts: Land in question was originally owned by a certain Fermina Castro which she sought to register on
1973 which was opposed by the OSG but was then dismissed and as such attaining finality (Dir. Of lands did
not appeal) then an OCT was subsequently issued in Castro’s favor. The said land was then sold to Jesus
Yujuico which then was subdivided into two, one for him and the other portion sold to a certain Carpio (also
petitioner in said case). Sometime in 1997, Pub. Estates Authority (PEA) was established for reclamation
purposes and then was tasked to create the Manila Coastal Road. Both Y and C discovered that in the plan,
it overlapped their land and a portion of their lands were sold by PEA to Manila Bay Dev Corp (MDBC). Y and
C filed a petition for quieting title with damages but in 1998, parties entered into a Compromise Agreement
approved by the RTC. A deed of exchange of property transpired where a 1.4 has of PEA land will be
conveyed to Y and C in exchange for a combined property of 1.7 has. Subsequently, a new PEA GM was
appointed, such held in abeyance the compromise agreement which led to the filing of a petition for relief
which reached the SC, however was dismissed for being filed out of time. In 2001, however, the OSG filed
a petition for annulment and cancellation was filed claiming that the land surveyed for Fermina Castro in
1973 was part of the Manila Bay thus claiming further that Castro had no registrable rights on said land
because it forms part of public dominion. RTC held that action was barred by res judicata however, it was
overturned by the CA claiming that res judicata does not apply to lands of Public Domain.
Issue: WON Equitable Estoppel applies in said case?
Held: Yes. GR is that Estoppel does not operate against the state, certain deviation has been allowed citing
the case of Manila Lodge No. 761 vs. CA where it stated: Nevertheless, the government must not be allowed
to deal dishonorably or capriciously with its citizens, and must not play an ignoble part or do a shabby thing;
and subject to limitations, the doctrine of equitable estoppel may be invoked against public authorities as
well as against private individuals. SC said EE may be invoked against public authorities when said land was
already alienated to innocent purchasers of value. Not only was the land barred by estoppel but by laches
as well because Yujuico acquired the land from Castro in 1974 or more than 27 years have lapsed until the
case for reversion was filed in 2001. Another law cited is Sec. 32 of PD 1529 which recognizes the rights of
innocent purchasers for value, it states “but in no case shall such petition be entertained by the court where
an innocent purchaser for value has acquired the land or an interest therein, whose rights may be
prejudiced.” According to SC, Yujuico relied on the clean title of Castro and acquired it through good faith
and for value, and there was no showing that he acquired such fraudulently. Thus, he should be protected
under the Torrens system as well as subsequent buyer Carpio. Aside from such grounds, SC relied on the
grounds of res judicata and Laches. On RJ, a similar case existed thus applying Doctrine of Precedent plus by
virtue of the Comp Agreement gov’t recognized ownership of Yujuico of said disputed land. On laches, 27
years.
29. LAND BANK OF THE PHILIPPINES VS. REPUBLIC (GR NO. 150824)
FACTS:
On September 26, 1969, Angelito C. Bugayong was issued OCT No. P-2823, which emanated from Sales
Patent No. 4576 issued on September 22, 1969. It covered a parcel of land located in Bocana, Kabacan,
Davao City, with an area of 41,276 square meters. It was originally surveyed as Lot No. 4159 and identified
as marshy and under water during high tide and that it used to be a portion of a dry river bed near the
mouth of Davao River.
The land was initially subdivided into four lots under Subdivision Plan (LRC) Psd-139511 approved by the
Commissioner of Land Registration on April 23, 1971, as follows: Lot Nos. 4159-A, 4159-B, 4159-C and 4159-
D. Consequently, OCT No. P-2823 was cancelled and new Transfer Certificates of Title (TCTs) replaced it, all
in the name of Bugayong. All four lots were then sold by Bugayong to different persons. Lot No. 4159-A,
which was then under TCT No. T-32769, was sold to spouses Lourdes and Candido Du. The said TCT was
then cancelled and replaced by TCT No. T-42166 in the name of spouses Du.
Afterwards, the spouses Du further caused the subdivision of their land into two lots. They sold one of said
lots to spouses Felix and Guadalupe Dayola, who were issued TCT No. T-45586. The other remaining lot,
registered under TCT No. T-45587, was retained by and registered in the names of spouses Du.
Subsequently, Du spouses' TCT No. T-45587 was cancelled and was replaced by TCT No. T-57348 registered
in the name of Lourdes Farms, Inc., who subsequently mortgaged the property to petitioner LBP on April
14, 1980.
The validity of OCT No. P-2823, as well as its derivative TCTs, remained undisturbed until some residents of
the land it covered filed a formal petition before the Bureau of Lands on July 15, 1981. Investigation and
ocular inspection were conducted by the Bureau of Lands to check the legitimacy of OCT No. P-2823. It was
found out that: (1) at the time Sales Patent No. 4576 was issued to Bugayong, the land it covered was still
within the forest zone, classified under Project No. 1, LC-47 dated August 6, 1923; it was released as
alienable and disposable land only on March 25, 1981, pursuant to BFD Administrative Order No. 4-1585
and to the provisions of Section 13, Presidential Decree (P.D.) No. 705; (2) the land was marshy and covered
by sea water during high tide; and (3) Bugayong was never in actual possession of the land. Considering such
findings, the Bureau of Lands resolved that the sales patent in favor of Bugayong was improperly and illegally
issued and that the Director of Lands had no jurisdiction to dispose of the subject land.
Upon recommendation of the Bureau of Lands, the Republic of the Philippines represented by the Director
of Lands, through the Office of the Solicitor General (OSG), instituted a complaint before the RTC in Davao,
Branch 15, for the cancellation of title/patent and reversion of the land covered by OCT No. P-2823 into the
mass of public domain. Such complaint was filed against Bugayong and the other present owners and
mortgagees of the land, such as Lourdes Farms, Inc. and the latter's mortgagee, petitioner LBP.
The RTC then rendered a decision, which was affirmed by the CA, declaring OCT No. P-2823 as well as its
derivative transfer certificate of titles as null and void.
ISSUE(S):
Whether or not the CA erred in not finding the petitioner a mortgagee in good faith and for value.
RULING:
The contention that LBP has an interest over the subject land as a mortgagee has no merit. The mortgagor,
Lourdes Farms, Inc. from which LBP supposedly obtained its alleged interest has never been the owner of
the mortgaged land. Acquisition of the subject land by Lourdes Farms, Inc. is legally impossible as the land
was released as alienable and disposable only on March 25, 1981. Even at present, no one could have
possessed the same under a claim of ownership for the period of thirty (30) years required under Section
48 (b) of Commonwealth Act No. 141, as amended. Hence, LBP acquired no rights over the land.
Under Article 2085 of the Civil Code, it is essential that the mortgagor be the absolute owner of the thing
mortgaged. Since Lourdes Farms, Inc. is not the owner of the land, it does not have the capacity to mortgage
it to LBP.
Even assuming that LBP was able to obtain its own TCT over the property by means of its mortgage contract
with Lourdes Farms, Inc., the title must also be cancelled as it was derived from OCT No. P-2823 which was
not validly issued to Bugayong. Forest lands cannot be owned by private persons. It is not registerable
whether the title is a Spanish title or a Torrens title. 46 It is well settled that a certificate of title is void when
it covers property of public domain classified as forest or timber or mineral land. Any title issued covering
non-disposable lots even in the hands of an alleged innocent purchaser for value shall be cancelled.
Further, the same issue was already addressed by the Court in its Resolution of November 14, 2001 on the
petition filed by the Philippine National Bank (PNB) in G.R. No. 149568 entitled Philippine National Bank v.
Republic of the Philippines represented by the Director of Lands. In this case, PNB is also a mortgagee of
another derivative TCT of the same OCT No. 2823. The Court in this case held that the petitioner does not
dispute that its predecessor-in-interest, Angelito C. Bugayong, had the subject property registered in his
name when it was forest land. Indeed, even if the subject property had been eventually segregated from
the forest zone, neither petitioner nor its predecessors-in-interest could have possessed the same under
claim of ownership for the requisite period of thirty (30) years because it was released as alienable and
disposable only on March 25, 1981. The Court also rejected the petitioner’s contention that respondent’s
action for reversion is barred by prescription for having been filed nearly two decades after the issuance of
Bugayong's sales patent. It was held that prescription does not lie against the State for reversion of property
which is part of the public forest or of a forest reservation registered in favor of any party. Public land
registered under the Land Registration Act may be recovered by the State at any time.
Contrary to the argument of LBP, since the title is void, it could not have become incontrovertible. Even
prescription may not be used as a defense against the Republic. On this aspect, the Court in Reyes v. Court
of Appeals, citing Republic v. Court of Appeals, held that: “Petitioners' contention that the government is
now estopped from questioning the validity of OCT No. 727 issued to them, considering that it took the
government 45 years to assail the same, is erroneous. We have ruled in a host of cases that prescription
does not run against the government. In point is the case of Republic v. Court of Appeals, wherein we
declared that in so far as the timeliness of the action of the Government is concerned, it is basic that
prescription does not run against the State. xxx xxx xxx When the government is the real party in interest,
and is proceeding mainly to assert its own rights and recover its own property, there can be no defense on
the ground of laches or limitation. xxx xxx xxx Public land fraudulently included in patents or certificates of
title may be recovered or reverted to the State in accordance with Section 101 of the Public Land Act.
Prescription does not lie against the State in such cases for the Statute of Limitations does not run against
the State. The right of reversion or reconveyance to the State is not barred by prescription.
Moreover, the constitutional guarantee of non-impairment of contracts may not likewise be used by LBP to
validate its interest over the land as mortgagee. The State's restraint upon the right to have an interest or
ownership over forest lands does not violate the constitutional guarantee of non-impairment of contracts.
Said restraint is a valid exercise of the police power of the State.
30. HEIRS OF MARIO MALABANAN VS. REPUBLIC (GR NO. 179987)
Facts:
On 20 February 1998, Mario Malabanan filed an application for land registration before the RTC of Cavite-
Tagaytay, covering a parcel of land situated in Silang Cavite, consisting of 71,324 square meters. Malabanan
claimed that he had purchased the property from Eduardo Velazco, and that he and his predecessors-in-
interest had been in open, notorious, and continuous adverse and peaceful possession of the land for more
than thirty (30) years. Velazco testified that the property was originally belonged to a twenty-two hectare
property owned by his great-grandfather, Lino Velazco. Lino had four sons– Benedicto, Gregorio, Eduardo
and Esteban–the fourth being Aristedes’s grandfather. Upon Lino’s death, his four sons inherited the
property and divided it among themselves. But by 1966, Esteban’s wife, Magdalena, had become the
administrator of all the properties inherited by the Velazco sons from their father, Lino. After the death of
Esteban and Magdalena, their son Virgilio succeeded them in administering the properties, including Lot
9864-A, which originally belonged to his uncle, Eduardo Velazco. It was this property that was sold by
Eduardo Velazco to Malabanan.
Among the evidence presented by Malabanan during trial was a Certification dated June 11, 2001, issued
by the Community Environment & Natural Resources Office, Department of Environment and Natural
Resources (CENRO-DENR), which stated that the subject property was “verified to be within the Alienable
or Disposable land per Land Classification Map No. 3013 established under Project No. 20-A and approved
as such under FAO 4-1656 on March 15, 1982.” On 3 December 2002, the RTC approved the application for
registration.
The Republic interposed an appeal to the Court of Appeals, arguing that Malabanan had failed to prove that
the property belonged to the alienable and disposable land of the public domain, and that the RTC had erred
in finding that he had been in possession of the property in the manner and for the length of time required
by law for confirmation of imperfect title. On 23 February 2007, the Court of Appeals reversed the RTC ruling
and dismissed the appliocation of Malabanan.
Issues:
1. In order that an alienable and disposable land of the public domain may be registered under Section 14(1)
of Presidential Decree No. 1529, otherwise known as the Property Registration Decree, should the land be
classified as alienable and disposable as of June 12, 1945 or is it sufficient that such classification occur at
any time prior to the filing of the applicant for registration provided that it is established that the applicant
has been in open, continuous, exclusive and notorious possession of the land under a bona fide claim of
ownership since June 12,1945 or earlier?

2. For purposes of Section 14(2) of the Property Registration Decree may a parcel of land classified as
alienable and disposable be deemed private land and therefore susceptible to acquisition by prescription in
accordance with the Civil Code?
Held:
The Petition is denied.
1.) In connection with Section 14(1) of the Property Registration Decree, Section 48(b) of the Public Land
Act recognizes and confirms that “those who by themselves or through their predecessors in interest have
been in open, continuous, exclusive, and notorious possession and occupation of alienable and disposable
lands of the public domain, under a bona fide claim of acquisition of ownership, since June 12, 1945” have
acquired ownership of, and registrable title to, such lands based on the length and quality of their
possession.
(a) Since Section 48(b) merely requires possession since 12 June 1945 and does not require that
the lands should have been alienable and disposable during the entire period of possession, the possessor
is entitled to secure judicial confirmation of his title thereto as soon as it is declared alienable and
disposable, subject to the timeframe imposed by Section 47 of the Public Land Act.
(b) The right to register granted under Section 48(b) of the Public Land Act is further confirmed
by Section 14(1) of the Property Registration Decree.
2.) In complying with Section 14(2) of the Property Registration Decree, consider that under the Civil Code,
prescription is recognized as a mode of acquiring ownership of patrimonial property. However, public
domain lands become only patrimonial property not only with a declaration that these are alienable or
disposable. There must also be an express government manifestation that the property is already
patrimonial or no longer retained for public service or the development of national wealth, under Article
422 of the Civil Code. And only when the property has become patrimonial can the prescriptive period for
the acquisition of property of the public dominion begin to run.
(a) Patrimonial property is private property of the government. The person acquires ownership of
patrimonial property by prescription under the Civil Code is entitled to secure registration thereof under
Section 14(2) of the Property Registration Decree.
(b) There are two kinds of prescription by which patrimonial property may be acquired, one
ordinary and other extraordinary. Under ordinary acquisitive prescription, a person acquires ownership of
a patrimonial property through possession for at least ten (10) years, in good faith and with just title. Under
extraordinary acquisitive prescription, a person’s uninterrupted adverse possession of patrimonial property
for at least thirty (30) years, regardless of good faith or just title, ripens into ownership.
It is clear that the evidence of petitioners is insufficient to establish that Malabanan has acquired ownership
over the subject property under Section 48(b) of the Public Land Act. There is no substantive evidence to
establish that Malabanan or petitioners as his predecessors-in-interest have been in possession of the

property since 12 June 1945 or earlier. The earliest that petitioners can date back their possession, according
to their own evidence—the Tax Declarations they presented in particular—is to the year 1948. Thus, they
cannot avail themselves of registration under Section 14(1) of the Property Registration Decree.
Neither can petitioners properly invoke Section 14(2) as basis for registration. While the subject property
was declared as alienable or disposable in 1982, there is no competent evidence that is no longer intended
for public use service or for the development of the national evidence, conformably with Article 422 of the
Civil Code. The classification of the subject property as alienable and disposable land of the public domain
does not change its status as property of the public dominion under Article 420(2) of the Civil Code. Thus, it
is insusceptible to acquisition by prescription.
31. DENR, ET. AL. VS. MAYOR YAP, ET. AL. (GR NO. 167707)
Facts:
On November 10, 1978, then President Marcos issued Proc. No. 1801 declaring Boracay Island, among other
islands, caves and peninsulas in the Philippines, as tourist zones and marine reserves under the
administration of the Philippine Tourism Authority (PTA). President Marcos later approved the issuance of
PTA Circular 3-82 dated September 3, 1982, to implement Proclamation No. 1801.
Claiming that Proclamation No. 1801 and PTA Circular No 3-82 precluded them from filing an application for
judicial confirmation of imperfect title or survey of land for titling purposes, respondents-claimants Mayor
. Yap, Jr., and others filed a petition for declaratory relief with the RTC in Kalibo, Aklan.
In their petition, respondents-claimants alleged that Proc. No. 1801 and PTA Circular No. 3-82 raised doubts
on their right to secure titles over their occupied lands. They declared that they themselves, or through
their predecessors-in-interest, had been in open, continuous, exclusive, and notorious possession and
occupation in Boracay since June 12, 1945, or earlier since time immemorial. They declared their lands for
tax purposes and paid realty taxes on them. Respondents-claimants posited that Proclamation No. 1801 and
its implementing Circular did not place Boracay beyond the commerce of man. Since the Island was
classified as a tourist zone, it was susceptible of private ownership. Under Section 48(b) of the Public Land
Act, they had the right to have the lots registered in their names through judicial confirmation of imperfect
titles.
The Republic, through the OSG, opposed the petition for declaratory relief. The OSG countered that Boracay
Island was an unclassified land of the public domain. It formed part of the mass of lands classified as “public
forest,” which was not available for disposition pursuant to Section 3(a) of the Revised Forestry Code, as
amended. The OSG maintained that respondents-claimants’ reliance on PD No. 1801 and PTA Circular No.
3-82 was misplaced. Their right to judicial confirmation of title was governed by Public Land Act and Revised
Forestry Code, as amended. Since Boracay Island had not been classified as alienable and disposable,
whatever possession they had cannot ripen into ownership.
On July 14, 1999, the RTC rendered a decision in favor of respondents-claimants, declaring that, “PD 1810
and PTA Circular No. 3-82 Revised Forestry Code, as amended.

The OSG moved for reconsideration but its motion was denied. The Republic then appealed to the CA. On
In 2004, the appellate court affirmed in toto the RTC decision. Again, the OSG sought reconsideration but it
was similarly denied. Hence, the present petition under Rule 45.
On May 22, 2006, during the pendency the petition in the trial court, President Gloria Macapagal-Arroyo
issued Proclamation No. 1064 classifying Boracay Island partly reserved forest land (protection purposes)
and partly agricultural land (alienable and disposable).
On August 10, 2006, petitioners-claimants Sacay, and other landowners in Boracay filed with this Court an
original petition for prohibition, mandamus, and nullification of Proclamation No. 1064. They alleged that
the Proclamation infringed on their “prior vested rights” over portions of Boracay. They have been in
continued possession of their respective lots in Boracay since time immemorial.
On November 21, 2006, this Court ordered the consolidation of the two petitions
Issue:
WON private claimants have a right to secure titles over their occupied portions in Boracay
Held:
Except for lands already covered by existing titles, Boracay was an unclassified land of the public domain
prior to Proclamation No. 1064. Such unclassified lands are considered public forest under PD No. 705.
PD No. 705 issued by President Marcos categorized all unclassified lands of the public domain as public
forest. Section 3(a) of PD No. 705 defines a public forest as “a mass of lands of the public domain which has
not been the subject of the present system of classification for the determination of which lands are needed
for forest purpose and which are not.” Applying PD No. 705, all unclassified lands, including those in Boracay
Island, are ipso facto considered public forests. PD No. 705, however, respects titles already existing prior
to its effectivity.
The 1935 Constitution classified lands of the public domain into agricultural, forest or timber, such
classification modified by the 1973 Constitution. The 1987 Constitution reverted to the 1935 Constitution
classification with one addition: national parks. Of these, only agricultural lands may be alienated. Prior to
Proclamation No. 1064 of May 22, 2006, Boracay Island had never been expressly and administratively
classified under any of these grand divisions. Boracay was an unclassified land of the public domain.
A positive act declaring land as alienable and disposable is required. In keeping with the presumption of
State ownership, the Court has time and again emphasized that there must be a positive act of the
government, such as a presidential proclamation or an executive order; an administrative action;
investigation reports of Bureau of Lands investigators; and a legislative act or a statute. The applicant may
also secure a certification from the government that the land claimed to have been possessed for the
required number of years is alienable and disposable. The burden of proof in overcoming such presumption
is on the person applying for registration (or claiming ownership), who must prove that the land subject of
the application is alienable or disposable.
In the case at bar, no such proclamation, executive order, administrative action, report, statute, or
certification was presented to the Court. The records are bereft of evidence showing that, prior to 2006,
the portions of Boracay occupied by private claimants were subject of a government proclamation that the
land is alienable and disposable. Matters of land classification or reclassification cannot be assumed. They
call for proof.
Proc. No. 1801 cannot be deemed the positive act needed to classify Boracay Island as alienable and
disposable land. If President Marcos intended to classify the island as alienable and disposable or forest, or
both, she would have identified the specific limits of each, as President Arroyo did in Proclamation No. 1064.
This was not done in Proclamation No. 1801.
32. VDA. TE TAN TOCO VS. MUNICIPAL COUNCIL OF ILOILO (49 PHIL 52)
It appears from the record that the widow of Tan Toco had sued the municipal council of Iloilo for the
amount of P42,966.40, being the purchase price of two strips of land, one on Calle J. M. Basa consisting of
592 square meters, and the other on Calle Aldiguer consisting of 59 square meters, which the municipality
of Iloilo had appropriated for widening said street. The Court of First Instance of Iloilo sentenced the said
municipality to pay the plaintiff the amount so claimed, plus the interest, and the said judgment was on
appeal affirmed by this court.
On account of lack of funds the municipality of Iloilo was unable to pay the said judgment, wherefore
plaintiff had a writ of execution issue against the property of the said municipality, by virtue of which the
sheriff attached two auto trucks used for street sprinkling, one police patrol automobile, the police stations
on Mabini street, and in Molo and Mandurriao and the concrete structures, with the corresponding lots,
used as markets by Iloilo, Molo, and Mandurriao.
ISSUE: Whether or not the property levied upon is exempt from execution.
HELD:
The principle is that the property for public use of the State is not within the commerce of man and,
consequently, is unalienable and not subject to prescription. Likewise, property for public use of the
municipality is not within the commerce of man so long as it is used by the public and, consequently, said
property is also inalienable.
It is evident that the movable and immovable property of a municipality, necessary for governmental
purposes, may not be attached and sold for the payment of a judgment against the municipality. The
supreme reason for this rule is the character of the public use to which such kind of property is devoted.
The necessity for government service justifies that the property of public use of the municipality be exempt
from execution just as it is necessary to exempt certain property of private individuals in accordance with
section 452 of the Code of Civil Procedure.

33. PASAY CITY GOVERNMENT VS. CFI (GR NO. L-32162)
Facts: This is a petition for review on certiorari of the order rendered by the Court of First Instance of Manila,
Branch X, presided by Honorable Judge Jose L. Moya on July 23, 1969.
On August 12, 1964, respondent-appellee V.D. Isip, Sons & Associates represented by Vicente David
Isip entered into a contract with the City of Pasay represented by the then Mayor Pablo Cuneta. The contract
entitled "Contract and Agreement" was for the construction of a new Pasay City Hall at F.B. Harrison St.,
Pasay City.
The respondentappellee accomplished under various stages of construction the amount of work
(including supplies and materials) equivalent to an estimated value of P1,713,096.00 of the total contract
price of P4,914,500.80. The appellants paid only the total amount of P1,100,000.00 to the respondent-
appellee leaving an amount of P613,096.00 immediately due from the petitioner-appellants to the
respondent-appellee. Notwithstanding demands for payment thereof, the petitioner-appellants failed to
remit the aforesaid amount of P613,096.00 to the respondent-appellee.
The parties arrived at a draft of amicable agreement which was submitted to the Municipal Board of
Pasay City for its consideration. On February 25, 1969, the Municipal Board of Pasay enacted Ordinance No.
1012 which approved the Compromise Agreement and also authorized and empowered the incumbent City
Mayor Jovito Claudio to represent the appellant Pasay City Government, subject to the final approval of the
respondent Court herein. On March 12, 1969, the respondent Court approved the said Compromise
Agreement including a Manifestation and Addendum thereto.
On April 10, 1969, the appellants filed an urgent motion seeking a declaration of legality of the original
contract and agreement dated August 4, 1964 from the respondent Court. On May 10, 1969, the respondent
Court issued an order declaring that the original contract is legal and valid. On June 21, 1969, at the instance
of the appellee, the respondent Court granted an order of execution pursuant to which a writ of execution
dated June 25, 1969 was issued. On July 9, 1969, an application for and notice of garnishment were made
and effected upon the funds of appellant Pasay City Government with the Philippine National Bank.
On July 11, 1969, the appellant filed an urgent motion to set aside the respondent Court's order of
June 21, 1969 and to quash the writ of execution issued pursuant thereto upon the following grounds: 1)
that the execution sought was then still premature, the period of 90 days stipulated not having elapsed as
yet; 2) that the obligations of the parties under the Compromise Agreement were reciprocal and the
appellee not having put up a new performance bond in the sufficient amount equivalent to 20% of the
remaining cost of construction as per agreement, the appellants cannot be obliged to pay the sum due
appellee as yet; 3) that the Sheriff has no power or authority to levy or garnish on execution the general
funds, especially more so, the trust funds of the defendant Pasay City. On July 19, 1969, the respondent
Court issued an order stating that inasmuch as the defendant has not yet paid the plaintiff as of this date
then "the writ of execution and of garnishment are declared to be again in full force and effect ..."
Issue: WON the funds of the Pasay City Government which were garnished by the City Sheriff are by law
exempt from execution and/or garnishment.
Held: Atty: it is the ordinance that saved the private citizens. Difference between this case and PVI vs Tesda’s
case is the ordinance.
A compromise has upon the parties the effect and authority of res judicata; but there shall be no execution
except in compliance with a judicial compromise. A compromise agreement not contrary to law, public
order, public policy, morals or good customs is a valid contract which is the law between the parties
themselves. A judgment on a compromise is a final and executory. It is immediately executory in the absence
of a motion to set the same aside on the ground of fraud, mistake or duress. In fact in the herein case before
Us, execution has already been issued. Considering this in the light of Article 2041 of the New Civil Code, to
wit: Art. 2041. If one of the parties fails or refuses to abide by the compromise, the other party may either
enforce the compromise or regard it as rescinded and insist upon his original demand.
It is obvious that the respondent-appellee did not only succeed in enforcing the compromise but said
plaintiff-appellee likewise wants to rescind the said compromise. It is clear from the language of the law,
specifically Article 2041 of the New Civil Code that one of the parties to a compromise has two options: 1)
to enforce the compromise; or 2) to rescind the same and insist upon his original demand. The respondent-
appellee in the case herein before Us wants to avail of both of these options. This can not be done. The
respondent-appellee cannot ask for rescission of the compromise agreement after it has already enjoyed
the first option of enforcing the compromise by asking for a writ of execution resulting thereby in the
garnishment of the Pasay City funds deposited with the Philippine National Bank which eventually was
delivered to the respondent-appellee.
Upon the issuance of the writ of execution, the petitioner-appellants moved for its quashal alleging
among other things the exemption of the government from execution. This move on the part of the
petitioner-appellant is at first glance laudable for "all government funds deposited with the Philippine
National Bank by any agency or instrumentality of the government, whether by way of general or special
deposit, remain government funds and may not be subject to garnishment or levy. But, inasmuch as an
ordinance has already been enacted expressly appropriating the amount of P613,096.00 of payment to the
respondent-appellee, then the herein case is covered by the exception to the general nile stated in the case
of Republic vs. Palacio (L-20322, 23 SCRA 899 [May 29,1968]), to wit: Judgments against a State in cases
where it has consented to be sued, generally operate merely to liquidate and establish plaintiff's claim in
the absence of express provision; otherwise they cannot be enforced by processes of the law; and it is for
the legislature to provide for the payment in such manner as it sees fit.
Hence, the respondent Court was correct in refusing to quash the writ of execution it has issued.
34. ESPIRITU VS. MUNICIPAL COUNCIL OF POZORRUBIO (102 PHIL 867)
Facts: The town plaza of Pozzorubio was subjected to lease by the municipal council to market vendors who
created small make-shift stalls and some even small residences on said land. This was evidenced by the
collection of the municipal treasurer of P.25/ per sq. meter. It was questioned by some civic organizations
which then called the attention of the Provincial Board and the Secretary of Interior which declared such
action as illegal. Thus, said Council passed Reso. No. 209 (S. 1951) which asked for the removal of said stalls
within 60 days. Some of the Stall owners opposed such resolution and filed a prohibition in CFI Pangasinan.
Issue: WON Town Plazas are properties of Public Domain thus cannot be subjected to sale nor lease?
Held: Town Plazas are properties of Public Domain and cannot be a subject of contract either for sale or for
lease. Such are devoted for public use and made available for public in general thus it is outside the
commerce of man. The use of the plaza in the case at bar was temporarily tolerated due to the emergency

caused by the aftermath of the war, since the emergency has ceased, temporary occupation must likewise
cease.
35. PROVINCE OF ZAMBOANGA DEL NORTE VS. CITY OF ZAMBOANGA (GR NO. L-24440)
Even if the property is in the name of LGU, for as long as the property are used for public service, the real owner
is the State. LGU has no proprietary rights over them (lands).
FACTS:
Prior to its incorporation as a chartered city, the Municipality of Zamboanga used to be the provincial capital
of the then Zamboanga Province. On October 12, 1936, Commonwealth Act 39 was approved converting
the Municipality of Zamboanga into Zamboanga City. Sec. 50 of the Act also provided that buildings and
properties which the province shall abandon, upon the transfer of the capital to another place, will be
acquired and paid for by the City of Zamboanga at a price to be fixed by the Auditor General. The properties
and buildings referred to consisted of 50 lots and some buildings constructed thereon, located in the City of
Zamboanga and covered individually by Torrens certificates of title in the name of Zamboanga Province.
Based on the records, such properties were being utilized as capitol site, school site, hospital site,
leprosarium, highschool playground and hydroelectric site, among others. The Appraisal Committee formed
by the Auditor General, pursuant to CA 39, fixed the value of the properties and buildings in question left
by Zamboanga Province in Zamboanga City at P1,294,244.00.
On June 6, 1952, Republic Act 711 was approved dividing the province of Zamboanga into two (2):
Zamboanga del Norte and Zamboanga del Sur. As to how the assets and obligations of the old province were
to be divided between the two new ones, Sec. 6 of the law provided that the funds, assets and other
properties and the obligations of the province of Zamboanga shall be divided equitably between the
Province of Zamboanga del Norte and the Province of Zamboanga del Sur by the President of the Philippines,
upon the recommendation of the Auditor General.
Pursuant to such provision, the Auditor General, on January 11, 1955, apportioned the assets and
obligations of the defunct Province of Zamboanga as follows: 54.39% for Zamboanga del Norte and 45.61%
for Zamboanga del Sur. Zamboanga del Norte therefore became entitled to 54,39% of P1,294,244.00, the
total value of the lots and buildings in question, or P704,220.05 payable by Zamboanga City.
The Secretary of Finance then authorized the Commissioner of Internal Revenue (CIR) to deduct from the
regular internal revenue allotment for the City of Zamboanga for several fiscal quarters totaling P57,373.46,
which was credited to the province of Zamboanga del Norte, in partial payment of the P704,220,05 due it.
However, on June 17, 1961, Republic Act 3039 was approved amending Sec. 50 of Commonwealth Act 39
by providing that all buildings, properties and assets belonging to the former province of Zamboanga and
located within the City of Zamboanga are hereby transferred, free of charge, in favor of the said City of
Zamboanga.”
Consequently, the Secretary of Finance ordered the CIR to stop from effecting further payments to
Zamboanga del Norte and to return to Zamboanga City the sum paid and taken from the internal revenue
allotment of the latter. Of the total amount paid by Zamboanga City, a total of P43,030.11 has already been
returned to it.

This prompted the petitioner Zamboanga del Norte to file, on March 5, 1962, a complaint entitled
"Declaratory Relief with Preliminary Mandatory Injunction" in the Court of First Instance against defendants
Zamboanga City, the Secretary of Finance and the CIR, praying that: (a) Republic Act 3039 be declared
unconstitutional for depriving the province of property without due process and just compensation; (b)
plaintiff's rights and obligations under said law be declared; (c) the Secretary of Finance and the CIR be
enjoined from reimbursing the sum of 57,373.46 to defendant City; and (d) the latter be ordered to continue
paying the balance of P704,220.05.
After trial, the lower court held rendered a decision in favor of the petitioners. Prior to the perfection of
defendants' appeal, petitioner filed a motion to reconsider praying that Zamboanga City be ordered instead
to pay the P704,220.05 in lump sum with 6% interest per annum, which was subsequently granted by the
lower court.
ISSUE(S):
Whether or not Republic Act 3039 is unconstitutional.
RULING:
The validity of the law ultimately depends on the nature of the properties in question. If the property is
owned by the municipality in its public and governmental capacity, the property is public and Congress has
absolute control over it. But if the property is owned in its private or proprietary capacity, then it is
patrimonial and Congress has no absolute control; the municipality cannot be deprived of it without due
process and payment of just compensation. The capacity in which the property is held is, however,
dependent on the use to which it is intended and devoted.
In this case, the Court applied the norm obtaining under the principles constituting the law of Municipal
Corporations, which states that, to be considered public, it is enough that the property be held and devoted
for governmental purposes like local administration, public education, public health, etc. Thus, all those of
the 50 properties in question, which are devoted to public service are deemed public; the rest remain
patrimonial.
Following such classification, the Court upheld the validity of Republic Act 3039 insofar as it affects the lots
used as capitol site, school sites and its grounds, hospital and leprosarium sites and the high school
playground sites, or a total of 24 lots, since these were held by the former Zamboanga province in its
governmental capacity and therefore are subject to the absolute control of Congress. However, Republic
Act 3039 cannot be applied to deprive Zamboanga del Norte of its share in the value of the rest of the 26
remaining lots which are patrimonial properties since they are not being utilized for distinctly governmental
purposes.
It results then that Zamboanga del Norte is still entitled to collect from the City of Zamboanga the former's
54.39% share in the 26 properties which are patrimonial in nature, said share to be computed on the basis
of the valuation of said 26 properties as contained in Resolution No. 7, dated March 26, 1949, of the
Appraisal Committee formed by the Auditor General.
Petitioner's share, however, cannot be paid in lump sum, except as to the P43,030.11 already returned to
defendant City. The return of said amount to defendant was without legal basis. Republic Act 3039 took
effect only on June 17, 1961 after a partial payment of P57,373.46 had already been made. Since the law

did not provide for retroactivity, it could not have validly affected a completed act. Hence, the amount of
P43,030.11 should be immediately returned by defendant City to petitioner province. The remaining
balance, if any, in the amount of plaintiff's 54.39% share in the 26 lots should then be paid by defendant
City in the same manner originally adopted by the Secretary of Finance and the CIR, and not in lump sum.
36. SALAS VS. JARENCIO (46 SCRA 734)
The case of Salas, the lesson there is that even if the property is registered in the name of the municipality or
city concerned, but if that property is used for public purposes, who has control over these properties?
The State.
How would you therefore characterized the law that created the city of Zamboanga which transfers, free of
charge, some properties owned by the province or the newly created cities?
The rule is even if they are held in the name of the LGU, but if those properties are used for public service or
use, control over them lies on the State. One way of manifesting this control is when the State or Congress will
enact a law to transfer properties from one LGU to another. No constitutional objection to this because this is a
form of State’s control.
For an LGU to have control over a particular property, what then must it establish based on this case and the
Manila case?
They must be able to prove that there is an authorization given by Congress, just like what was done in Salas vs.
Jarencio.
Are there properties that can be used for LGU without authorization?
Patrimonial Properties.
So, If the LGU contends that this is a patrimonial property, what will you show the court?
There must be a positive act from the gov’t withdrawing the same from public use to patrimonial.
What evidence can you show to prove it is patrimonial?
By showing that it is purchased from the proprietary funds of the LGU.
Facts:
February 24, 1919—the 4th Branch of the Court of First Instance of Manila, acting asa land registration
court, rendered judgment in Case No. 18, G.L.R.O. Record No. 111,declaring the City of Manila the owner in
fee simple of a parcel of land known as LotNo. 1, Block 557 of the Cadastral Survey of the City of Mani1a,
containing an area of 9,689.8 square meters, more or less.
August 21, 1920 –Title No. 4329 issued on in favor of the City of Manila after the landin question was
registered in the City's favor. The Torrens Title expressly states thatthe City of Manila was the owner in 'fee
simple' of the said land

September 20, 1960—the Municipal Board, presided by then Vice-Mayor Antonio Villegas, requested "His
Excellency the President of the Philippines to consider the feasibility of declaring the city property bounded
by Florida, San Andres andNebraska Streets, under Transfer Certificate of Title Nos. 25545 and 25547,
containing an area of 7,450 square meters, as patrimonial property of the City of Manila for the purpose of
reselling these lots to the actual occupants thereof
The said resolution of the Municipal Board of the City of Manila was officiallytransmitted to the President
of the Philippines the following day, to which a copy wasfurnished to the Senate and House of
Representatives of the Congress of the Philippines.
June 20, 1964—RA 4118 was passed by the Senate and approved by the President pursuant to the request.
Such bill was enacted for social justice purposes, that they be sold to their currently landless occupants.
But due to reasons which do not appear in the record, the City of Manila made a complete turn-about, for
on December 20, 1966, Antonio J. Villegas, in his capacity asthe City Mayor of Manila and the City of Manila
as a duly organized publiccorporation, brought an action for injunction and/or prohibition with
preliminaryinjunction to restrain, prohibit and enjoin the herein appellants, particularly the Governor of the
Land Authority and the Register of Deeds of Manila, from further implementing Republic Act No. 4118, and
praying for the declaration of Republic Act No. 4118 as unconstitutional.
Issue:
1.Whether or not the property involved is a private or patrimonial property of the City of Manila.
2.Whether or not Republic Act No. 4118 valid and not repugnant to the Constitution.
Held:
1. NO, it is the property of the State.
The rule is that when it comes to property of the municipality which it did not acquire in itsprivate or
corporate capacity with its own funds, the legislature can transfer itsadministration and disposition to an
agency of the National Government to be disposed of according to its discretion.
The possession of a municipality, excepting those acquired with its own funds in its private or corporate
capacity, such property is held in trust for the State for the benefit of its inhabitants, whether it be for
governmental or proprietary purposes. The City of Manila, although declared by the Cadastral Court as
owner in fee simple, has not shown by any shred of evidence in what manner it acquired said land as its
private or patrimonial property. The presumption is that such land came from the State upon the creation
of the municipality. That it has in its name a registered title is not questioned, but this title should be deemed
to be held in trust for the State as the land covered thereby was part of the territory of the City of Manila
granted by the sovereign upon its creation Therefore, the land in question pertains to the State and the City
of Manila merely acted as trustee for the benefit of the people therein for whom the State can legislate in
the exercise of its legitimate powers.
2. Yes, it is valid.
Consequently, the City of Manila was not deprived of anything it owns, either under the dueprocess clause
or under the eminent domain provisions of the Constitution. If it failed to getfrom the Congress the
concession it sought of having the land involved given to it as its patrimonial property, the Courts possess
no power to grant that relief. Republic Act No. 4118 does not, therefore, suffer from any constitutional
infirmity
37. MANILA LODGE NO. 761 VS. COURT OF APPEALS (73 SCRA 162)
Facts:
• June 26, 1905, Philippine Commission enacted Act No. 1360 authorizing the city of Manila to reclaim a
portion of Manila Bay. It was to form part of Luneta extension. It was stipulated that the reclaimed area
“shall be the property of the City of Manila” and that “the city of Manila is hereby authorized to set aside a
tract not to exceed 500 ft. x 600 ft. for a hotel site for lease with a term not to exceed 99 years.
• Act No. 1657 was enacted to amend Act No. 1360 which authorize the city of Manila either to lease or to
sell the portion set aside as a hotel site.
• The reclaimed area, 25 hectares, was registered and on January 20, 1911 OCT No. 1909 was issued in the
name of the city of Manila.
• The City of Manila conveyed 5,543.07sq.m. of reclaimed area to Manila Lodge No. 761 which was then
sold to Tarlac Development Corporation together with all the improvements.
Issue:
WON the said subject land is part of the public domain
Held:
We hold that it is of public dominion, intended for public use.
Firstly, if the reclaimed area was granted to the City of Manila as its patrimonial property, the City could, by
virtue of its ownership, dispose of the whole reclaimed area without need of authorization to do so from
the lawmaking body. Thus Article 348 of the Civil Code of Spain provides that "ownership is the right to
enjoy and dispose of a thing without further limitations than those established by law." 36 The right to
dispose ( jus disponendi) of one's property is an attribute of ownership. Act No. 1360, as amended, however,
provides by necessary implication, that the City of Manila could not dispose of the reclaimed area without
being authorized by the lawmaking body. If the reclaimed area were patrimonial property of the City, the
latter could dispose of it without need of the authorization provided by the statute, and the authorization
to set aside . . . lease . . . or sell . . . given by the statute would indeed be superfluous. To authorize means
to empower, to give a right to act. 38 Act No. 1360 furthermore qualifies the verb "authorize" with the
adverb "hereby," which means "by means of this statue or section." Hence without the authorization
expressly given by Act No. 1360, the City of Manila could not lease or sell even the northern portion; much
less could it dispose of the whole reclaimed area. Consequently, the reclaimed area was granted to the City
of Manila, not as its patrimonial property. At most, only the northern portion reserved as a hotel site could
be said to be patrimonial property, for, by express statutory provision it could be disposed of, and the title
thereto would revert to the City should the grantee fail to comply with the terms provided by the statute.
Secondly, the reclaimed area is an "extension to the Luneta in the City of Manila." 40 If the reclaimed area
is an extension of the Luneta, then it is of the same nature or character as the old Luneta. It is not disputed
that the old Luneta is a public park or plaza and it is so considered by Section 859 of the Revised Ordinances

of the City of Manila. 42 Hence the "extension to the Luneta" must be also a public park or plaza and for
public use.
Thirdly, the reclaimed area was formerly a part of the Manila Bay. A bay is nothing more than an inlet of the
sea. Pursuant to Article 1 of the Law of Waters of 1866, bays, roadsteads, coast sea, inlets and shores are
parts of the national domain open to public use. These are also property of public ownership devoted to
public use, according to Article 339 of the Civil Code of Spain.When the shore or part of the bay is reclaimed,
it does not lose its character of being property for public use.
Fourthly, Act 1360, as amended, authorized the lease or sale of the northern portion of the reclaimed area
as a hotel site. The subject property is not that northern portion authorized to be leased or sold; the subject
property is the southern portion. Hence, applying the rule of expresio unius est exlusio alterius, the City of
Manila was not authorized to sell the subject property. The application of this principle of statutory
construction becomes the more imperative in the case at bar inasmuch as not only must the public grant of
the reclaimed area to the City of Manila be, as above stated, strictly construed against the City of Manila,
but also because a grant of power to a municipal corporation, as happens in this case where the city is
authorized to lease or sell the northern portion of the Luneta extension, is strictly limited to such as are
expressly or impliedly authorized or necessarily incidental to the objectives of the corporation.
Fifthly, Article 344 of the Civil Code of Spain provides that "property of public use, in provinces and in towns,
comprises the provincial and town roads, the squares, streets, fountains, and public waters, the
promenades, and public works of general service paid for by such towns or provinces." A park or plaza, such
as the extension to the Luneta, is undoubtedly comprised in said article.
38. COMMISSIONER OF PUBLIC HIGHWAYS, ET. AL. VS. LOURDES SAN DIEGO, ET. AL. (GR NO. L-30098)
FACTS: On or about November 20, 1940, the Government of the Philippines filed a complaint for eminent
domain in the Court of First Instance of Rizal 1 for the expropriation of a parcel of land belonging to N. T.
Hashim, with an area of 14,934 square meters, needed to construct a public road, now known as Epifanio
de los Santos Avenue. On November 25,1940, the Government took possession of the property upon
deposit with the City Treasurer of the sum of P23,413.64 fixed by the Court therein as the provisional value
of all the lots needed to construct the road, including Hashim's property. The records of the expropriation
case were destroyed and lost during the second world war, and neither party took any step thereafter to
reconstitute the proceedings.
On November 7, 1966, the Compromise Agreement subscribed by counsel for respondent estate and by
then Solicitor General Antonio P. Barredo, now a member of this Court, was submitted to the lower Court
and under date of November 8, 1966, respondent judge, as prayed for, rendered judgment approving the
Compromise Agreement and ordering petitioners, as defendants therein, to pay respondent estate as
plaintiff therein, the total sum of P209,076.00 for the expropriated lot.
October 14, 1968, respondent Garcia, as special sheriff, forthwith served a Notice of Garnishment, together
with the writ of execution dated October 14, 1968, issued by respondent Manuela C. Florendo as Deputy
Clerk of Court, on respondent Philippine National Bank, notifying said bank that levy was thereby made
upon funds of petitioners Bureau of Public Highways and the Auditor General on deposit, with the bank to
cover the judgment of P209,076.00 in favor of respondent estate, and requesting the bank to reply to the
garnishment within five days. On October 16, 1968, three days before the expiration of the five-day
deadline, respondent Benjamin V. Coruña in his capacity as Chief, Documentation Staff, of respondent
bank's Legal Department, allegedly acting in excess of his authority and without the knowledge and consent
of the Board of Directors and other ranking officials of respondent bank, replied to the notice of garnishment
that in compliance therewith, the bank was holding the amount of P209,076.00 from the account of
petitioner Bureau of Public Highways. Respondent bank alleged that when it was served with Notice to
Deliver Money signed by respondent Garcia, as special sheriff, on October 17, 1968, it sent a letter to the
officials of the Bureau of Public Highways notifying them of the notice of garnishment.
Under date of October 16, 1968, respondent estate further filed with the lower Court an ex-parte motion
for the issuance of an order ordering respondent bank to release and deliver to the special sheriff,
respondent Garcia, the garnished amount of P209,076.00 deposited under the account of petitioner Bureau,
which motion was granted by respondent judge in an order of October 18, 1968. On the same day, October
18, 1968, respondent Coruña, allegedly taking advantage of his position, authorized the issuance of a
cashier's check of the bank in the amount of P209,076.00, taken out of the funds of petitioner Bureau
deposited in current account with the bank and paid the same to respondent estate, without notice to said
petitioner
ISSUE: WON respondent Court's two questioned orders (1) for execution of the judgment, in pursuance
whereof respondent deputy clerk issued the corresponding writ of execution and respondent special sheriff
issued the notice of garnishment, and (2) for delivery of the garnished amount of P209,076.00 to respondent
estate as judgment creditor through respondent special sheriff, are null and void
HELD: Null and void on the fundamental ground that government funds are not subject to execution or
garnishment.
As early as 1919, the Court has pointed out that although the Government, as plaintiff in expropriation
proceedings, submits itself to the jurisdiction of the Court and thereby waives its immunity from suit, the
judgment that is thus rendered requiring its payment of the award determined as just compensation for the
condemned property as a condition precedent to the transfer to the title thereto in its favor, cannot be
realized upon execution. 12 The Court there added that it is incumbent upon the legislature to appropriate
any additional amount, over and above the provisional deposit, that may be necessary to pay the award
determined in the judgment, since the Government cannot keep the land and dishonor the judgment. The
universal rule that where the State gives its consent to be sued by private parties either by general or special
law, it may limit claimant's action "only up to the completion of proceedings anterior to the stage of
execution" and that the power of the Courts ends when the judgment is rendered, since government funds
and properties may not be seized under writs of execution or garnishment to satisfy such judgments, is
based on obvious considerations of public policy. Disbursements of public funds must be covered by the
corresponding appropriation as required by law. The functions and public services rendered by the State
cannot be allowed to be paralyzed or disrupted by the diversion of public funds from their legitimate and
specific objects, as appropriated by law.
39. PHILIPPINE NATIONAL BANK VS. HON. JUDGE JAVIER PABALAN (GR NO. L-33112)
Facts: On 17 Dec 1970, Judge Pabalan issued a writ of execution followed thereafter by a notice of
garnishment of the funds of Philippine Virginia Tobacco Administration (PVTA) in the sum of P12,724.66
deposited with the petitioner bank. PNB La Union filed an administrative complaint against Pabalan for
grave abuse of discretion, alleging that the latter failed to recognize that the questioned funds are of public

character and therefore may not be garnished, attached or levied upon. The PNB La Union Branch invoked
the doctrine of non suability, putting a bar on the notice of garnishment.
ISSUE: Whether or not PNB may be sued.
HELD: Funds of public corporations which can sue and be sued are not exempt from garnishment. PVTA is
also a public corporation with the same attributes, a similar outcome is attributed. The government has
entered with them into a commercial business hence it has abandoned its sovereign capacity and has
stepped down to the level of a corporation. Therefore, it is subject to rules governing ordinary corporations
and in effect can be sued. Therefore, the petition of PNB La Union is denied.
40. PROFESSIONAL VIDEO INC. VS. TESDA (GR NO. 155504)
Facts: TESDA procured the services of PROVI for the creation of polyvinyl (PVC) Identification Cards which
TESDA issues to trainees who passed its certification process. TESDA failed to pay an outstanding balance of
P35M which led PROVI to file a complaint with RTC for sum of money with damages against TESDA which
also prayed for a Writ of Attachment/garnishment against TESDA. RTC granted the PROVI’s Writ against the
properties of TESDA amounting to P35M. The CA reversed the RTC which stated that TESDA’s funds are
public in nature thus exempt from garnishment and second, purchase of PVC Cards was a necessary incident
of its gov’t function.
Issue: WON the writ of attachment against TESDA and its funds, to cover PROVI's claim against TESDA, is
valid.
Held: INVALID. SC upheld CA. First, TESDA as an unincorporated instrumentality of the government
operating under a specific charter and performing governmental functions, STATE IMMUNITY apply to it. By
reason of Public Policy, performance of governmental function cannot be hindered or delayed by suits, nor
can these suits control the use and disposition of the means for the performance of governmental functions.
Second, selling of the PVC cards does not characterize such transaction as industrial or business but rather
part of TESDA’s general gov’tal function as they are undertaken to discharge such functions. Third, TESDA's
funds are still public in nature and, thus, cannot be the valid subject of a writ of garnishment or attachment.
Under Section 33 of the TESDA Act, the TESDA budget for the implementation of the Act shall be included
in the annual General Appropriation Act; hence, TESDA funds, being sourced from the Treasury, are moneys
belonging to the government, or any of its departments, in the hands of public officials. As reiterated in
many cases, public funds cannot be the object of garnishment proceedings even if the consent to be sued
had been previously granted and the state liability adjudged. Thus, there should be a specific appropriation
covering such payment for PROVI to be able to garnish.
41. VILLA VS. HEIRS OF ALTAVAS (GR NO. 162028)
FACTS:
On November 26, 1997, respondents filed a Complaint for ejectment with the MCTC petitioner together
with Virginia Bermejo and Rolito Roxas, alleging that respondents are heirs of the registered owner of two
parcels of fishpond designated as Lot No. 2816 and Lot No. 2817, who have been in actual possession
through their administrator, overseer and representative, the late councilor Mussolini C. Bermejo, the

husband of Virgina. It was further alleged that on January 31, 1994, after the death of Mussolini, Virgina
took over the possession of the premises in question without the consent or permission of respondents.
Virginia leased in favor of petitioner a portion of about five hectares of Lot No. 2816, without any right to
do so. On October 21, 1997, respondents through counsel formally sent demand letters to Virginia and
petitioner to vacate the respective portions occupied by them; however, despite said demands, they
persisted in continuing their illegal possession of the premises.
The MCTC subsequently rendered a decision in favor of the respondents, declaring them the rightful owners
and legal possessors of the subject parcels of land. Aggrieved by the Decision of the MCTC, petitioner and
Virginia filed an appeal with the RTC; however, the RTC dismissed the appeal of petitioner for her failure to
file her appeal memorandum, while, the RTC dismissed Virginia's appeal because of the latter’s withdrawal
of the appeal. Petitioner then filed a Motion for Reconsideration but the same was denied by the RTC.
Petitioner filed a special civil action for certiorari with the CA contending that the RTC committed grave
abuse of discretion in dismissing her appeal on technical ground. This was, however, dismissed by the CA
and the orders of the RTC were affirmed by the CA.
In this petition for certiorari, petitioner avers that respondents failed to establish that they are in actual
possession of the lots in question; that, in fact, they have not proven that they are the owners of the said
properties; and that petitioner has a valid contract of lease with Virginia which entitles her to the possession
of Lot No. 2817. Petitioner further argues that respondents have no cause of action against her as they are
not lessors, vendors or persons with whom petitioner has a contract, express or implied and that
respondents failed to aver facts constitutive of either forcible entry or unlawful detainer. As such, the MCTC
did not acquire jurisdiction over the case.
ISSUE(S):
Whether or not petitioner has claim over the subject property.
RULING:
Petitioner’s contention is without merit.
The Court reiterated the well-settled rule that the trial court’s findings of fact, especially when affirmed by
the CA are generally binding and conclusive. In the case at bar, the CA sustained the following findings of
the MCTC, to wit: that respondents' predecessor, Enrique Altavas, was not divested of his ownership of the
subject lots; that the titles over the subject properties remain in his name; that, not being the owner or
administrator of the said lots, Virginia has no right to enter into any contract for the lease of the said
properties; and that petitioner's possession of portions of the disputed properties is merely upon tolerance
of respondents.
Petitioner failed to show that any of the following exceptions to the general rules was present in this case:
(1) the conclusion is grounded on speculations, surmises or conjectures; (2) the inference is manifestly
mistaken, absurd or impossible; (3) there is grave abuse of discretion; (4) the judgment is based on a
misapprehension of facts; (5) the findings of fact are conflicting; (6) there is no citation of specific evidence
on which the factual findings are based; (7) the finding of absence of facts is contradicted by the presence
of evidence on record; (8) the findings of the CA are contrary to the findings of the trial court; (9) the CA
manifestly overlooked certain relevant and undisputed facts that, if properly considered, would justify a
different conclusion; (10) the findings of the CA are beyond the issues of the case; and (11) such findings are
contrary to the admissions of both parties. Thus, it does not warrant a review of the findings of fact of the
lower courts.
As to respondents' ownership and right of possession of the subject properties, records show that the MCTC
based its Decision not only on the Position Paper of respondents but also on the pieces of evidence
submitted by them. Respondents attached the Original Certificates of Title Nos. RO-4326 and RO-4327 in
the name of Enrique, covering Lot Nos. 2816 and 2817, respectively, as evidence of their ownership and
right to possess the disputed properties.
Moreover, being a mere lessee, petitioner steps into the shoes of her lessor, Virginia. However, Virginia's
claim of ownership was not sustained by the MCTC, which instead found that she was not the owner of and
had no right to possess the disputed property or to transfer possession of the same, through lease, in favor
of another person. Virginia later withdrew her appeal filed with the RTC. By reason of such withdrawal, she
is bound by the findings of the MCTC.
42. ESTATE OF SOLEDED MANANTAN VS. ANICETO SOMERA (GR NO. 145867)
Facts:
Manantan alleged in her Complaint that she was the owner of a 214- square meter parcel of land. After
causing a relocation survey of the subject property, she discovered that respondent and Tavera occupied
certain portions thereof [disputed portions]. Manantan advised respondent and Tavera to vacate the
disputed portions as soon as she would decide to sell the subject property to an interested buyer. Later, a
prospective buyer approached Manantan about the subject property. However, upon learning that
respondent and Tavera occupied some portions of the subject property, the prospective buyer decided not
to proceed with the sale until after respondent and Tavera vacated the same. Manantan repeatedly
requested respondent and Tavera to abandon the disputed portions of the subject property, but the two
refused. Hence, Manantan hired the services of a lawyer who immediately sent a formal letter of demand
to respondent and Tavera requesting them to leave the disputed portions. Respondent and Tavera,
however, ignored the demand letter.
In her Complaint in Civil Case, Manantan prayed that respondent, Tavera, and all persons claiming rights
under them, be ordered to vacate the portions of the subject property they were occupying. Respondent
and Tavera filed a Joint Answer to Manantan’s Complaint, he averred that the MTCC had no jurisdiction over
the case, because it was neither an action for forcible entry nor for unlawful detainer. The Complaint did
not allege that Manantan was deprived of possession of the disputed portions by force, intimidation, threat,
strategy, or stealth, which would make a case for forcible entry. It also did not state that respondent and
Tavera withheld possession of the disputed portions from Manantan after expiration or termination of the
right to hold possession of the same by virtue of an express or implied contract, which would build a case
for unlawful detainer. Respondent and Tavera argued that even if there was dispossession, it was evident
from the face of the Complaint that it was not committed through any of the means enumerated under Rule
70 of the Rules of Court and, thus, forcible entry or unlawful detainer could not be the proper remedy for
Manantan.
Issue:
Whether or not the MTCC had jurisdiction over the action?
Held:
A case for unlawful detainer must be instituted before the proper municipal trial court or metropolitan trial
court within one year from unlawful withholding of possession. Such one year period should be counted
from the date of plaintiff’s last demand on defendant to vacate the real property, because only upon the
lapse of that period does the possession become unlawful. Well-settled is the rule that the jurisdiction of
the court, as well as the nature of the action, are determined by the allegations in the complaint. To vest
the court with the jurisdiction to effect the ejectment of an occupant from the land in an action for unlawful
detainer, it is necessary that the complaint should embody such a statement of facts clearly showing
attributes of unlawful detainer cases, as this proceeding is summary in nature. The complaint must show
on its face enough ground to give the court jurisdiction without resort to parol testimony.
In the case at bar, the Complaint does not allege facts showing compliance with the prescribed one year
period to file an action for unlawful detainer. It does not state the material dates that would have
established that it was filed within one year from the date of Manantan’s last demand upon respondent to
vacate the disputed portion of land. Such allegations are jurisdictional and crucial, because if the complaint
was filed beyond the prescribed one year period, then it cannot properly qualify as an action for unlawful
detainer over which the MTCC can exercise jurisdiction. It may be an accion publiciana or accion
reivindicatoria.
Thus, in order that a municipal trial court or metropolitan trial court may acquire jurisdiction in an action
for unlawful detainer, it is essential that the complaint specifically allege the facts constitutive of unlawful
detainer. The jurisdictional facts must appear on the face of the complaint. When the complaint fails to
aver facts constitutive of unlawful detainer, an action for unlawful detainer is not a proper remedy and,
thus, the municipal trial court or metropolitan trial court has no jurisdiction over the case.
Further, it appears from the allegations in the Complaint that the respondent was already in possession
of the disputed portion at the time Manantan bought the subject property from the Bayot family, and it was
only after the conduct of a relocation survey, which supposedly showed that respondent was encroaching
on the subject property, did Manantan begin asserting her claim of ownership over the portion occupied
and used by respondent. Clearly, respondent’s possession of the disputed portion was not pursuant to any
contract, express or implied, with Manantan, and, resultantly, respondent’s right of possession over the
disputed portion is not subject to expiration or termination. At no point can it be said that respondent’s
possession of the disputed portion ceased to be legal and became an unlawful withholding of the property
from Manantan.
Since the Complaint in Civil Case No. 10467 failed to satisfy on its face the jurisdictional requirements for an
action for unlawful detainer, the Court of Appeals was correct in holding that the MTCC had no jurisdiction
over the said Complaint and should have dismissed the same.
43. IGLESIA NI CRISTO VS. HON. PONFERRADA (GR NO. 168943)
Facts:
• Enrique Santos, owner of a 936-square-meter parcel of land located in Tandang Sora, Quezon City covered
by Transfer Certificate of Title (TCT) No. 57272 issued on July 27, 1961 which cancelled TCT No. 57193-289,

had been in possession of the owner's duplicate of said title and had been in continuous, open, adverse and
peaceful possession of the property.
• Died on February 9, 1970 and was survived by his wife, Alicia Santos, and other plaintiffs, who were their
children. The Register of Deeds had the title reconstituted as TCT No. RT-110323, based on the owner's
duplicate of TCT No. 57272 due to the fire that burned down the ROD on June 11, 1988.
• Sometime in February 1996, plaintiffs learned that defendant was claiming ownership over the property
based on TCT No. 321744 issued on September 18, 1984 which, on its face, cancelled TCT No. 320898, under
the name of the Philippine National Bank, which allegedly cancelled TCT No. 252070 in the names of the
spouses Marcos and Romana dela Cruz.
• Enrique Santos, during his lifetime, and his heirs, after his death, never encumbered or disposed the
property. In 1996, plaintiffs had the property fenced but defendant deprived them of the final use and
enjoyment of their property.
Issue:
WON the action, either Quieting of title or Accion Reinvindicatoria had prescribed
Held:
The contention of petitioner has no merit. The nature of an action is determined by the material allegations
of the complaint and the character of the relief sought by plaintiff, and the law in effect when the action
was filed irrespective of whether he is entitled to all or only some of such relief. 37 As gleaned from the
averments of the complaint, the action of respondents was one for quieting of title under Rule 64 of the
Rules of Court, in relation to Article 476 of the New Civil Code. The latter provision reads:
Art. 476.Whenever there is a cloud on title to real property or any interest therein, by reason of any
instrument, record, claim, encumbrance or proceeding which is apparently valid or effective but is, in truth
and in fact, invalid, ineffective, voidable, or unenforceable, and may be prejudicial to said title, an action
may be brought to remove such cloud or to quiet the title.
An action may also be brought to prevent a cloud from being cast upon title to real property or any interest
therein.
A cloud is said to be a semblance of a title, either legal or equitable, or a cloud of an interest in land appearing
in some legal form but which is, in fact, unfounded, or which it would be inequitable to enforce. 38 An action
for quieting of title is imprescriptible until the claimant is ousted of his possession. 39
The owner of a real property is entitled to the relief of quieting of title even if, at the time of the
commencement of his action, he was not in actual possession of real property. After all, under Article 477
of the New Civil Code, the owner need not be in possession of the property. If on the face of TCT No. 321744
under the name of plaintiff, its invalidity does not appear but rests partly in pais, an action for quieting of
title is proper.
Admittedly, respondents interposed the alternative reinvindicatory action against petitioner. An accion
reinvindicatoria does not necessarily presuppose that the actual and material possession of the property is
on defendant and that plaintiff seeks the recovery of such possession from defendant. It bears stressing that
an accion reinvindicatoria is a remedy seeking the recovery of ownership and includes jus possidendi, jus
utendi, and jus fruendi as well. It is an action whereby a party claims ownership over a parcel of land and
seeks recovery of its full possession. 41 Thus, the owner of real property in actual and material possession

thereof may file an accion reinvindicatoria against another seeking ownership over a parcel of land including
jus vindicandi, or the right to exclude defendants from the possession thereof. In this case, respondents
filed an alternative reinvindicatory action claiming ownership over the property and the cancellation of TCT
No. 321744 under the name of petitioner. In fine, they sought to enforce their jus utendi and jus vindicandi
when petitioner claimed ownership and prevented them from fencing the property.
Since respondents were in actual or physical possession of the property when they filed their complaint
against petitioner on October 24, 2001, the prescriptive period for the reinvindicatory action had not even
commenced to run, even if petitioner was able to secure TCT No. 321744 over the property in 1984. The
reason for this is that
. . . one who is in actual possession of a piece of land claiming to be the owner thereof may wait until his
possession is disturbed or his title is attacked before taking steps to vindicate his right, the reason for the
rule being, that his undisturbed possession gives him a continuing right to seek the aid of a court of equity
to ascertain and determine the nature of the adverse claim of a third party and its effect on his own title,
which right can be claimed only by one who is in possession.
44. ROMAN CATHOLIC ARCHBISHOP OF MANILA, ET. AL. VS. COURT OF APPEALS (GR NO. 77425)
In 1930, the spouses Eusebio de Castro and Martina Rieta, executed a deed of donation in favor of the
Roman Catholic Archbishop of Manila covering a parcel of land located at Kawit, Cavite. The deed of
donation provides that the donee shall not dispose or sell the property within a period of 100 years from
the execution of the deed of donation, otherwise a violation of such condition would render ipso facto null
and void the deed of donation and the property would revert to the estate of the donors. In 1980, and while
still within the prohibited period, the Roman Catholic Bishop of Imus, sold the property to spouses Florencio
and Soledad Ignao. When the heirs of Eusebio Castro and Martina Rieta learned about the sale, they fi led
an action for the nullifi cation of the deed of donation, rescission of the sale in favor of the spouses Ignao
and reconveyance of the property. When the case was elevated to the Supreme Court, the Court declared
the prohibition imposed on the donation as contrary to public policy. Applying the provisions of Article 727
of the Code, the Court further held that such condition shall be considered as not imposed. The Court
explained —
“The cause of action of private respondents is based on the alleged breach by petitioners of the resolutory
condition in the deed of donation that the property donated should not be sold within a period of one
hundred (100) years from the date of execution of the deed of donation. Said condition, in our opinion,
constitutes anundue restriction on the rights arising from ownership of petitioners and is, therefore,
contrary to public policy.
Donation, as a mode of acquiring ownership, results in an effective transfer of title over the property from
the donor to the donee. Once a donation is accepted, the donee becomes the absolute owner of the
property donated. Although the donor may impose certain conditions in the deed of donation, the same
must not be contrary to law, morals, good customs, public order and public policy. The condition imposed
in the deed of donation in the case before us constitutes a patently unreasonable and undue restriction on
the right of the donee to dispose of the property donated, which right is an indispensable attribute of
ownership. Such a prohibition against alienation, in order to be valid, must not be perpetual or for an
unreasonable period of time.

Certain provisions of the Civil Code illustrative of the aforesaid policy may be considered applicable by
analogy. Under the third paragraph of Article 494, a donor or testator may prohibit partition for a period
which shall not exceed twenty (20) years. Article 870, on its part, declares that the dispositions of the
testator declaring all or part of the estate inalienable for more than twenty (20) years are void.
It is signifi cant that the provisions therein regarding a testator also necessarily involve, in the main, the
devolution of property by gratuitous title hence, as is generally the case of donations, being an act of
liberality, the imposition of an unreasonable period of prohibition to alienate the property should be
deemed anathema to the basic and actual intent of either the donor or testator. For that reason, the
regulatory arm of the law is or must be interposed to prevent an unreasonable departure from the
normative policy expressed in the aforesaid Articles 494 and 870 of the Code.
In the case at bar, we hold that the prohibition in the deed of donation against the alienation of the property
for an entire century, being an unreasonable emasculation and denial of an integral attribute of ownership,
should be declared as an illegal or impossible condition within the contemplation of Article 727 of the Civil
Code. Consequently, as specifically stated in said statutory provision, such condition shall be considered as
not imposed. No reliance may accordingly be placed on said prohibitory paragraph in the deed of donation.
The net result is that, absent said proscription, the deed of sale supposedly constitutive of the cause of
action for the nullification of the deed of donation is not in truth violative of the latter hence, for lack of
cause of action, the case for private respondents must fail.”
45. GERMAN MANAGEMENT & SERVICES, INC. VS. HON. COURT OF APPEALS (GR NO. 76216)
Facts: Spouses Jose are residents of Pennsylvania, Philadelphia, USA are owners of the land situated in Sitio
Inarawan, San Isidro, Antipolo, Rizal (the land being disputed in the case at bar.) The spouses Jose executed
a special power of attorney authorizing petitioner German Management Services to develop their property.
They have already acquired the proper permits to do so but they discovered that the land was occupied by
the respondent with 20 other farmers (members of the Concerned of Farmer’s Association.) These farmers
have occupied the land for the last twelve to fifteen years prior to the issuance of the permits and they
already have their crops all over the property. In short, they are in actual possession of the land.
Petitioners tried to forcibly drive the farmers away and; demolish and bulldoze their crops and
property. The respondents filed in CFI because they were deprived of their property without due process of
law by trespassing, demolishing and bulldozing their crops and property situated in the land. CFI and RTC
denied it but CA reversed the decision. Petitioners tried to appeal the decision in CA but were denied thus
this appeal.
Issue: WON private respondents are entitled to file a forcible entry case against petitioner.
Held: YES, they are entitled to file a forcible entry case. Since private respondents were in actual possession
of the property at the time they were forcibly ejected by petitioner, private respondents have a right to
commence an action for forcible entry regardless of the legality or illegality of possession.
Private respondents, as actual possessors, can commence a forcible entry case against petitioner
because ownership is not in issue. Forcible entry is merely a quieting process and never determines the
actual title to an estate. Title is not involved, only actual possession. It is undisputed that private

respondents were in possession of the property and not the petitioners nor the spouses Jose. Although the
petitioners have a valid claim over ownership this does not in any way justify their act of ―forcible entry.
It must be stated that regardless of the actual condition of the title to the property the party in
peaceable quiet possession shall not be turned out by a strong hand, violence or terror. Thus, a party who
can prove prior possession can recover such possession even against the owner himself.Whatever may be
the character of his possession, if he has in his favor priority in time, he has the security that entitles him to
remain on the property until he is lawfully ejected by a person having a better right by accion publiciana or
accion reivindicatoria. The doctrine of self help, which the petitioners were using to justify their actions, are
not applicable in the case because it can only be exercised at the time of actual or threatened dispossession
which is absent in the case at bar (in fact they are the ones who are threatening to remove the respondents
with the use of force.) Article 536 basically tells us that the owner or a person who has a better right over
the land must resort to judicial means to recover the property from another person who possesses the land.
When possession has already been lost, the owner must resort to judicial process for the recovery of
property. As clearly stated in Article 536- ―In no case may possession be acquired through force or
intimidation as long as there is a possessor who objects thereto. He who believes that he has an action or
right to deprive another of the holding of a thing must invoke the aid of the competent court, if holder
should refuse to deliver the thing.
46. AIR TRANSPORTATION OFFICE AND MACTAN-CEBU INTERNATIONAL AIRPORT VS. ANTIONIO GOPUCO
(GR NO. 158563)
Facts: Eminent Domain case where original owner Gapuco sought for the recovery of a portion of a land
which previously constituted the LAHUG Airport. In 1949, landowners surrounding the vicinity of Lahug
airport were informed of an expropriation of their lands for the purpose of expansion with reassurance that
they would be able to repurchase the same when said airport would be abandoned. Defendant was one of
the few who refused. However, CFI promulgated a decision in favor of Civil Aeronautics Authority (CAA)
which approved the lawful expropriation proceedings that was not appealed by Gopuco thus attaining
finality. However, Lahug was subsequently abandoned due to the creation of the MIA. A law was then
passed that created MCIAA upon which the assets of Lahug Airport was transferred thus including the titles
to such lands. Gapuco then wanted to get back his land by asserting that by closure of the Lahug Airport,
the original purpose for which the property was expropriated had ceased or otherwise been abandoned,
and title to the property had therefore should be reverted to him. Furthermore, he claims that he agreed
to a compromise settlement that assured that such expropriated lots will be resold to them at the same
price as it was expropriated in the event the lahug airport will be abandoned. RTC dismissed Gapuco’s claim
but CA reversed the RTC and upheld the reconveyance to Gapuco. RTC’s claim that the fact of abandonment
does not ipso facto give the original owner to recover the same. CA’s claim was about the existence of
genuine necessity, that when it ceases to exist gov’t interest must yield to the private rights of the original
owner.
Issue:
(1) When private land is expropriated for a particular public use, and that particular public use is abandoned,
does its former owner acquire a cause of action for recovery of the property?
(2) WON Gapuco had the right to get back his land.

Held:
(1) It depends upon the character of the title acquired by expropriator. SC said, If, for example, land is
expropriated for a particular purpose, with the condition that when that purpose is ended or abandoned
the property shall return to its former owner, then, of course, when the purpose is terminated or abandoned
the former owner reacquires the property so expropriated. On the other hand, when land has been acquired
for public use in fee simple, unconditionally, either by the exercise of eminent domain or by purchase, the
former owner retains no rights in the land, and the public use may be abandoned or the land may be devoted
to a different use, without any impairment of the estate or title acquired, or any reversion to the former
owner.
(2) No. The SC enunciated that Gapuco’s case was similar to that of CHIONGBIAN where, there was no
condition imposed to the effect that the lot would return to CHIONGBIAN or that CHIONGBIAN had a right
to repurchase the same if the purpose for which it was expropriated is ended or abandoned or if the
property was to be used other than as the Lahug Airport. What the SC simply imply was that there was
complete absence of PREPONDERANT EVIDENCE to prove that he had the right to repurchase that could
have been proven by virtue of the COMPROMISE SETTLEMENT he was claiming.
47. HEIRS OF MORENO VS. MCIAA (GR NO. 156273)
FACTS:
Petitioners are the successors-in-interest of the former registered owners of two parcels of land situated in
Lahug, Cebu City, designated as Lot No. 916 and Lot No. 920. In 1949, the National Airport Corporation
(NAC), as the predecessor agency of respondent Mactan-Cebu International Airport Authority (MCIAA),
wanted to acquire Lots Nos. 916 and 920 among other parcels of land for the proposed expansion of Lahug
Airport. The government assured the landowners that they could repurchase their lands once Lahug Airport
was closed or its operations transferred to Mactan Airport. Despite such offer, the landowners of the subject
properties refused because the payment was perceived to be way below the market price.
As the negotiations for the purchase of the lots necessary irredeemably broke down, the Civil Aeronautics
Administration (CAA), as the successor agency of the NAC, filed a complaint with the Court of First Instance
for the expropriation of Lots Nos. 916 and 920 and other subject realties. On December 29, 1961 the trial
court promulgated its decision condemning the subject lots for public use upon payment of just
compensation. No appeal was taken from the decision and the judgment of condemnation became final and
executory. Thereafter, the certificates of title for these parcels of land were issued in the name of the
Republic of the Philippines, which were later transferred in favor of respondent MCIAA under Republic Act
6958 in 1990.
Soon after the subject lots were transferred to MCIAA, Lahug Airport ceased operations as the Mactan
Airport was opened for incoming and outgoing flights. Thus, the properties which had been expropriated
for the extension of Lahug Airport were not utilized since no expansion of Lahug Airport was undertaken by
MCIAA and its predecessors-in-interest. As a result, petitioners wrote then President Ramos and the airport
manager begging them for the exercise of their alleged right to repurchase; however, their pleas were not
heeded.
On 11 March 1997 petitioners filed a complaint for reconveyance and damages with the RTC against
respondent MCIAA to compel the repurchase of the subject lots. Petitioners averred that they had been
convinced by the officers of the predecessor agency of respondent MCIAA not to oppose the expropriation
proceedings since in the future they could repurchase the properties if the airport expansion would not
push through. Such allegation was not objected to by respondent MCIAA. When the civil case was pending,
others alleging to have interest over the said properties through deeds of assignment or lease contract, filed
motions to intervene in the case.
On 12 April 1999, the RTC found merit in the claims of petitioners and granted them the right to repurchase
the properties at the amount pegged as just compensation but subject to the alleged property rights of
those who intervened. The trial court opined that the expropriation became illegal or functus officio when
the purpose for which it was intended was no longer there.
This decision, however, was subsequently reversed by the Court of Appeals on December 20, 2001 on the
ground that the judgment of condemnation was unconditional so that the rights gained therefrom by
respondent MCIAA were indicative of ownership in fee simple.
ISSUE(S):
Whether or not the petitioners are entitled to a right to repurchase their properties.
RULING:
The Court held in the affirmative. In the case of Fery v. Municipality of Cabanatuan, citing the case of Reyes
v. Court of Appeals, it was held that the government acquires only such rights in expropriated parcels of
land as may be allowed by the character of its title over the properties, to wit: If the land is expropriated for
a particular purpose, with the condition that when that purpose is ended or abandoned the property shall
return to its former owner, then, when the purpose is terminated or abandoned the former, the owner
reacquires the property so expropriated. If, upon the contrary, however, the decree of expropriation gives
to the entity a fee simple title, then, the land becomes the absolute property of the expropriator and the
non-user does not have the effect of defeating the title acquired by the expropriation proceedings. When
land has been acquired for public use in fee simple, unconditionally, either by the exercise of eminent
domain or by purchase, the former owner retains no rights in the land, and the public use may be
abandoned, or the land may be devoted to a different use, without any impairment of the estate or title
acquired, or any reversion to the former owner.
The respondents contention, in stating that one would not find an express statement in the decision to the
effect that the condemned lot would return to the landowner or that the landowner had a right to
repurchase the same if the purpose for which it was expropriated ended or abandoned or if the property
was to be used other than as the Lahug Airport, was upheld by the Court. However, the Court opined that
such is not fatal to the cause of the petitioners since the return or repurchase of the condemned properties
of petitioners could be readily justified as the manifest legal effect or consequence of the trial court's
underlying presumption that "Lahug Airport will continue to be in operation" when it granted the complaint
for eminent domain and the airport discontinued its activities.
Hence, respondent MCIAA as representative of the State is obliged to reconvey the lots to the petitioners,
who shall hold the same subject to existing liens established. In return, petitioners must restore to
respondent MCIAA what they received as just compensation with consequential damages by way of legal
interest from November 16, 1947. Petitioners must likewise pay respondent MCIAA the necessary expenses
it may have incurred in sustaining the properties and the monetary value of its services in managing them
to the extent that petitioners will be benefited thereby. The government, however, may keep whatever
income or fruits it may have obtained from the parcels of land, in the same way that petitioners need not
account for the interests that the amounts they received as just compensation may have earned in the
meantime. As a matter of justice and convenience, the law considers the fruits and interests as the
equivalent of each other.
Petitioners need not also pay for improvements introduced by third parties as the disposition of these
properties is governed by existing contracts and relevant provisions of law. As for the improvements that
respondent MCIAA may have made, if any, petitioners must pay respondent their prevailing free market
price in case petitioners opt to buy them and respondent decides to sell. In other words, if petitioners do
not want to appropriate such improvements or respondent does not choose to sell them, the improvements
would have to be removed without any obligation on the part of petitioners to pay any compensation to
respondent MCIAA for whatever it may have tangibly introduced therein.
48. MACTAN-CEBU INTERNATIONAL AIRPORT AUTHORITY VS. LOZADA, ET. AL. (GR NO. 176625)
Facts:
Subject of this case is a lot (Lot No. 88) located in Lahug, Cebu City. Its original owner was Anastacio
Deiparine when the same was subject to expropriation proceedings, initiated by Republic, represented by
the then Civil Aeronautics Administration (CAA), for the expansion and improvement of the Lahug Airport.
During the pendency of the expropriation proceedings, respondent Bernardo L. Lozada, Sr. acquired Lot No.
88 from Deiparine. The trial court ruled for the Republic and ordered the latter to pay Lozada the fair market
value of the lot. However, the projected improvement and expansion plan of the old Lahug Airport,
however, was not pursued. The plaintiff-respondents initiated a complaint for the recovery of possession
and reconveyance of ownership the subject lot.
On the other hand, the petitioners asked for the immediate dismissal of the complaint. They specifically
denied that the Government had made assurances to reconvey Lot No. 88 to respondents in the event that
the property would no longer be needed for airport operations. Petitioners instead asserted that the
judgment of condemnation was unconditional, and respondents were, therefore, not entitled to recover
the expropriated property notwithstanding non-use or abandonment thereof. The lower court ruled for
herein plaintiff-respondents, which decision was affirmed by the Court of Appeals. In this petition, the
petitioners argued that the judgment in Civil Case No. R-1881 was absolute and unconditional, giving title
in fee simple to the Republic.
Issue:
Whether or not a constructive trust was constituted in this case, and as such, the respondents herein are
entitled to the restitution of the expropriated property which was not used for a public purpose.
Held:
YES. Art. 1454 of the Civil Code provides: “If an absolute conveyance of property is made in order to secure
the performance of an obligation of the grantor toward the grantee, a trust by virtue of law is established.
If the fulfilment of the obligation is offered by the grantor when it becomes due, he may demand the
reconveyance of the property to him.”
Constructive trusts are fictions of equity which are bound by no unyielding formula when they are used by
courts as devices to remedy any situation in which the holder of legal title may not in good conscience retain
the beneficial interest.
In constructive trusts, the arrangement is temporary and passive in which the trustee’s sole duty is to
transfer the title and possession over the property to the plaintiff-beneficiary. Of course, the “wronged party
seeking the aid of a court of equity in establishing a constructive trust must himself do equity.” Accordingly,
the court will exercise its discretion in deciding what acts are required of the plaintiff-beneficiary as
conditions precedent to obtaining such decree and has the obligation to reimburse the trustee the
consideration received from the latter just as the plaintiff-beneficiary would if he proceeded on the theory
of rescission. In the good judgment of the court, the trustee may also be paid the necessary expenses he
may have incurred in sustaining the property, his fixed costs for improvements thereon, and the monetary
value of his services in managing the property to the extent that plaintiff-beneficiary will secure a benefit
from his acts.
The rights and obligations between the constructive trustee and the beneficiary, in this case, respondent
MCIAA and petitioners over Lots Nos. 916 and 920, are echoed in Art. 1190 of the Civil Code, “When the
conditions have for their purpose the extinguishment of an obligation to give, the parties, upon the
fulfillment of said conditions, shall return to each other what they have received x x x In case of the loss,
deterioration or improvement of the thing, the provisions which, with respect to the debtor, are laid down
in the preceding article shall be applied to the party who is bound to return x x x.
49. APO FRUITS CORPORATION VS. COURT OF APPEALS (GR NO. 164195)
Facts:
Apo Fruits Corp. (AFC) and Hijo Plantation Inc. (HPI) were owners of 5 parcels of land (1,338.60 has.) located
in San Isidro, Tagum, Davao. On 12 October 1995, the two voluntarily offered to sell the properties to the
DAR.
DAR offered P86.9M for AFC’s land and P164.40M for HPI’s land. AFC, HPI and DAR cannot agree on the
price hence the Complaint for Determination of Just Compensation was filed before the DAR Adjudication
Board on 14 February 1997.
The DARAB failed to render a decision on the valuation of the land for three years. But nevertheless, the
government deposited P26M into AFC’s account and P45M into HPI’s account as down payment in 1996.
The DAR also caused the titling of the land in the name of the Republic of the Philippines. Later, titles were
given to farmers under the CARP.
Due to DARAB’s failure to adjudicate, AFC and HPI filed a complaint for determination of just compensation
before the RTC of Davao which rendered a decision in favor of AFC and HPI. The RTC ruled, based on the
reports it gathered from assessors, that the purchase price should be higher than what was offered by DAR;
that the purchase price should be at P103.33/ sq. m; that DAR is to pay AFC and HPI a total of P1.38B.
Upon MR, the RTC modified its earlier ruling and added that the DAR should, in addition to the amount of
just compensation, pay AFC and HPI interest at a rate of 12% per annum computed from the time the
complaint was filed until the finality of the decision.
DAR appealed to the CA, the CA reversed the RTC.

The case was then elevated to the SC Third Division where the Court reversed the CA ruling and affirmed
the RTC decision with a slight modification that the order to pay interest at 12% per annum be deleted in its
entirety.
Hence this Motion for Reconsideration
Issue:
WON AFC and HPI were entitled to the payment of interest in addition to the amount of just compensation
that is due them
Held:
The taking of property under the CARL is an exercise by the State of the power of eminent domain. A basic
limitation on the State’s power of eminent domain is the constitutional directive that private property shall
not be taken for public use without just compensation
Just compensation refers to the sum equivalent to the market value of the property, broadly described to
be the price fixed by the seller in open market in the usual and ordinary course of legal action and
competition, or the fair value of the property as between one who receives and one who desires to sell. It
is fixed at the time of the actual taking by the State. Thus, if property is taken for public use before
compensation is deposited with the court having jurisdiction over the case, the final compensation must
include interests on its just value, to be computed from the tine the property is taken up to the time when
compensation is actually paid or deposited with the court. In fine, between the taking of the property and
the actual payment, legal interests accrue in order to place the owner in a position as good as (but not better
than) the position he was before the taking occurred.
It is explicit from LBP v. Wycoco that interest on the just compensation is imposed only in case of delay in
the payment thereof which must be sufficiently established. Given the foregoing, we find that the
imposition of interest on the award of just compensation is not justified and should therefore be deleted.
It must be emphasized that "pertinent amounts were deposited in favor of AFC and HPI within fourteen
months after the filing by the latter of the Complaint for determination of just compensation before the
RTC". 24 It is likewise true that AFC and HPI already collected P149.6 and P262 million, respectively,
representing just compensation for the subject properties. Clearly, there is no unreasonable delay in the
payment of just compensation which should warrant the award of 12% interest per annum in AFC and HPI's
favor.
50. CITY OF MANILA, ET. AL. VS. HON. LAGUIO, ET. AL. (GR NO. 118127)
FACTS:The pivotal issue in this Petition 1 under Rule 45 (then Rule 42) of the Revised Rules on Civil Procedure
seeking the reversal of the Decision 2 in Civil Case No. 93-66511 of the Regional Trial Court (RTC) of Manila,
Branch 18 (lower court), 3 is the validity of Ordinance No. 7783 (the Ordinance) of the City of Manila. 4
The antecedents are as follows:
Private respondent Malate Tourist Development Corporation (MTDC) is a corporation engaged in the
business of operating hotels, motels, hostels and lodging houses. 5 It built and opened Victoria Court in
Malate which was licensed as a motel although duly accredited with the Department of Tourism as a hotel.
6 On 28 June 1993, MTDC filed a Petition for Declaratory Relief with Prayer for a Writ of Preliminary
Injunction and/or Temporary Restraining Order 7 (RTC Petition)with the lower court impleading as
defendants, herein petitioners City of Manila, Hon. Alfredo S. Lim (Lim), Hon. Joselito L. Atienza, and the
members of the City Council of Manila (City Council). MTDC prayed that the Ordinance, insofar as it includes
motels and inns as among its prohibited establishments, be declared invalid and unconstitutional. 8
Enacted by the City Council 9 on 9 March 1993 and approved by petitioner City Mayor on 30 March 1993,
the said Ordinance is entitled —
AN ORDINANCE PROHIBITING THE ESTABLISHMENT OR OPERATION OF BUSINESSES PROVIDING CERTAIN
FORMS OF AMUSEMENT, ENTERTAINMENT, SERVICES AND FACILITIES IN THE ERMITA-MALATE AREA,
PRESCRIBING PENALTIES FOR VIOLATION THEREOF, AND FOR OTHER PURPOSES. 10
In the Petition and in its Memorandum, 33 petitioners in essence repeat the assertions they made before
the lower court. They contend that the assailedOrdinance was enacted in the exercise of the inherent and
plenary power of the State and the general welfare clause exercised by local government units provided for
in Art. 3, Sec. 18 (kk) of the Revised Charter of Manila and conjunctively, Section 458 (a) 4 (vii) of the Code.
34 They allege that the Ordinance is a valid exercise of police power; it does not contravene P.D. 499; and
that it enjoys the presumption of validity. 35
ISSUE: Validity of Ordinance No. 7783 (the Ordinance) of the City of Manila.
HELD: NOT VALID
The tests of a valid ordinance are well established. A long line of decisions has held that for an ordinance to
be valid, it must not only be within the corporate powers of the local government unit to enact and must
be passed according to the procedure prescribed by law, it must also conform to the following substantive
requirements: (1) must not contravene the Constitution or any statute; (2) must not be unfair or oppressive;
(3) must not be partial or discriminatory; (4) must not prohibit but may regulate trade; (5) must be general
and consistent with public policy; and (6) must not be unreasonable.
The Ordinance was passed by the City Council in the exercise of its police power, an enactment of the City
Council acting as agent of Congress. Local government units, as agencies of the State, are endowed with
police power in order to effectively accomplish and carry out the declared objects of their creation. 41 This
delegated police power is found in Section 16 of the Code, known as the general welfare clause, viz:
SECTION 16.General Welfare. — Every local government unit shall exercise the powers expressly granted,
those necessarily implied therefrom, as well as powers necessary, appropriate, or incidental for its efficient
and effective governance, and those which are essential to the promotion of the general welfare. Within
their respective territorial jurisdictions, local government units shall ensure and support, among other
things, the preservation and enrichment of culture, promote health and safety, enhance the right of the
people to a balanced ecology, encourage and support the development of appropriate and self-reliant
scientific and technological capabilities, improve public morals, enhance economic prosperity and social
justice, promote full employment among their residents, maintain peace and order, and preserve the
comfort and convenience of their inhabitants.

Requisites for the valid exercise
of Police Power are not met
To successfully invoke the exercise of police power as the rationale for the enactment of the Ordinance, and
to free it from the imputation of constitutional infirmity, not only must it appear that the interests of the
public generally, as distinguished from those of a particular class, require an interference with private rights,
but the means adopted must be reasonably necessary for the accomplishment of the purpose and not
unduly oppressive upon individuals. 60 It must be evident that no other alternative for the accomplishment
of the purpose less intrusive of private rights can work. A reasonable relation must exist between the
purposes of the police measure and the means employed for its accomplishment, for even under the guise
of protecting the public interest, personal rights and those pertaining to private property will not be
permitted to be arbitrarily invaded. 61
Lacking a concurrence of these two requisites, the police measure shall be struck down as an arbitrary
intrusion into private rights 62 — a violation of the due process clause.
The object of the Ordinance was, accordingly, the promotion and protection of the social and moral values
of the community. Granting for the sake of argument that the objectives of the Ordinance are within the
scope of the City Council's police powers, the means employed for the accomplishment thereof were
unreasonable and unduly oppressive.
The closing down and transfer of businesses or their conversion into businesses "allowed" under the
Ordinance have no reasonable relation to the accomplishment of its purposes. Otherwise stated, the
prohibition of the enumerated establishments will not per se protect and promote the social and moral
welfare of the community; it will not in itself eradicate the alluded social ills of prostitution, adultery,
fornication nor will it arrest the spread of sexual disease in Manila.
This is not warranted under the accepted definitions of these terms. The enumerated establishments are
lawful pursuits which are not per se offensive to the moral welfare of the community.
The problem, it needs to be pointed out, is not the establishment, which by its nature cannot be said to be
injurious to the health or comfort of the community and which in itself is amoral, but the deplorable human
activity that may occur within its premises. While a motel may be used as a venue for immoral sexual
activity, it cannot for that reason alone be punished. It cannot be classified as a house of ill-repute or as a
nuisance per se on a mere likelihood or a naked assumption.
Means employed are constitutionally infirm
It is readily apparent that the means employed by the Ordinance for the achievement of its purposes, the
governmental interference itself, infringes on the constitutional guarantees of a person's fundamental right
to liberty and property.
Modality employed is unlawful taking
In addition, the Ordinance is unreasonable and oppressive as it substantially divests the respondent of the
beneficial use of its property.

An ordinance which permanently restricts the use of property that it can not be used for any reasonable
purpose goes beyond regulation and must be recognized as a taking of the property without just
compensation. 77 It is intrusive and violative of the private property rights of individuals. EHTCAa
The Constitution expressly provides in Article III, Section 9, that "private property shall not be taken for
public use without just compensation." The provision is the most important protection of property rights in
the Constitution.
There are two different types of taking that can be identified. A "possessory" taking occurs when the
government confiscates or physically occupies property. A "regulatory" taking occurs when the
government's regulation leaves no reasonable economically viable use of the property.
What is crucial in judicial consideration of regulatory takings is that government regulation is a taking if it
leaves no reasonable economically viable use of property in a manner that interferes with reasonable
expectations for use. 83 A regulation that permanently denies all economically beneficial or productive use
of land is, from the owner's point of view, equivalent to a "taking" unless principles of nuisance or property
law that existed when the owner acquired the land make the use prohibitable.
Petitioners cannot take refuge in classifying the measure as a zoning ordinance. A zoning ordinance,
although a valid exercise of police power, which limits a "wholesome" property to a use which can not
reasonably be made of it constitutes the taking of such property without just compensation. Private
property which is not noxious nor intended for noxious purposes may not, by zoning, be destroyed without
compensation. Such principle finds no support in the principles of justice as we know them. The police
powers of local government units which have always received broad and liberal interpretation cannot be
stretched to cover this particular taking.
Distinction should be made between destruction from necessity and eminent domain. It needs restating
that the property taken in the exercise of police power is destroyed because it is noxious or intended for a
noxious purpose while the property taken under the power of eminent domain is intended for a public use
or purpose and is therefore "wholesome."
The foregoing premises show that the Ordinance is an unwarranted and unlawful curtailment of property
and personal rights of citizens. For being unreasonable and an undue restraint of trade, it cannot, even
under the guise of exercising police power, be upheld as valid.
51. NATIONAL POWER CORPORATION VS. LUCMAN IBRAHIM (GR NO. 168732)
Facts: The National Power Corporation constructed underground tunnels on several parcels of land owned
in common by Ibrahim and his co-owners situated in Lanao del Sur. NAPOCOR constructed the tunnels in
1978 but its existence was discovered by the land owners only in 1992. The tunnels were apparently being
used by the NAPOCOR in siphoning the water of Lake Lanao and in the operation of NAPOCOR's other
projects located in other parts of Mindanao.
The existence of the tunnels came to the attention of the co-owners only when one of them applied
for a permit with the Marawi City Water District to construct and/or install a motorized deep well. The
application was denied on the ground that the construction of the deep well would cause danger to lives
and properties because Marawi City lies in the area of volcanic and tectonic activity and because of the
existence of tunnels underneath the surface of their property. He was then informed that underneath the

land are underground tunnels of the NAPOCOR. Upon such discovery, the co-owners filed an action against
NAPOCOR for recovery of land and damages.
The trial court denied the prayer of the co-owners for the dismantling of the tunnels but ordered
NAPOCOR to pay them just compensation since there was "taking" of their property. the Court of Appeals
sustained the decision of the trial court. Hence, NAPOCOR elevated the matter to the Supreme Court.
NAPOCOR maintains that the sub-terrain portion where the underground tunnels were constructed
does not belong to Ibrahim and his co-owners even if they owned the property because their right to subsoil
does not extend beyond what is necessary to enable them to obtain all the utility and convenience that such
property can normally give. NAPOCOR also asserts that Ibrahim and his co-owners were still able to use the
subject property even with the existence of the tunnels.
Held: The Supreme Court held that pursuant to Article 437 of the Civil Code, the ownership of the land
extends to the surface as well as to the subsoil under it. The Court explained that the argument by the
petitioner that the landowner's right extends to the subsoil insofar as necessary for their practical interests
serves only to further weaken its case because the theory would limit the right to the subsoil upon the
economic utility which such area offer to the surface owners.
Presumably, according to the Court, the landowner's right extends to such height or depth where it is
possible for them to obtain some benefit or enjoyment, and it is extinguished beyond such limit as there
would be no more interest protected by law.
In this case, the landowners could have dug upon their property motorized deep wells but were
prevented from doing so by the authorities precisely because of the construction and existence of the
tunnels underneath the surface of their property. Hence, the landowners still had a legal interest in the sub-
terrain portion insofar as they could have excavated the same for the construction of the deep well.
There was, therefore, in this case, "taking" of private respondents' property which entitled the latter
to the payment of just compensation.
52. REPUBLIC VS. HON. COURT OF APPEALS AND JOSE DE LA ROSA (GR NO. L-43938)
Facts: Jose De la Rosa sought for the registration of a parcel of land from Sps. Babaliao and Alberto who
claims to have acquired it through prescription. However, Benguet Consolidated, Inc. and Atok Wedge
Mining Company opposed such registration by virtue of their Mining Claims which they acquired through
purchase on 1934 and 1931, respectively. Bureau of Forestry also opposed claiming that it was part of Forest
Reserves under Proc. 217 on Feb. 1929. Trial court denied the application due to failure to prove their claim
of ownership. CA however, reversed the TC, approving the application of JDR but subject to the rights of
BENGUET and ATOK. B and A appealed claiming Superior rights while Republic claims that neither JDC nor
A and B had valid claims because it is not Alienable and Disposable. The CA’s claim is that there were no
Conflict of Interest between JDR and A and B, it enunciated that under the aforesaid ruling, the land is
classified as mineral underneath and agricultural on the surface, subject to separate claims of title. Such
doctrine of CA because as commonly applied, SC said “for it is a well-known principle that the owner of a
piece of land has rights not only to its surface but also to everything underneath and the airspace above it
up to a reasonable height.”
Issue: WON the doctrine enunciated by the CA proper?

Held: No. (1) By virtue of the Mining Claim, the land which was originally classified as forest land ceased to
be so and became mineral — and completely mineral — once the mining claims were perfected. Benguet
and Atok have exclusive rights to the property in question by virtue of their respective mining claims which
they validly acquired before the Constitution of 1935 prohibited the alienation of all lands of the public
domain except agricultural lands, subject to vested rights existing at the time of its adoption.
(2) REGALIAN DOCTRINE which simply reserves to the State all minerals that may be found in public and
even private land devoted to "agricultural, industrial, commercial, residential or (for) any purpose other
than mining." Thus, if a person is the owner of agricultural land in which minerals are discovered, his
ownership of such land does not give him the right to extract or utilize the said minerals without the
permission of the State to which such minerals belong. Furthermore, once minerals are discovered in the
land, whatever the use to which it is being devoted at the time, such use may be discontinued by the State
to enable it to extract the minerals therein in the exercise of its sovereign prerogative. Thus, JDR with his
successors-in-interests could not have validly acquired such lands through prescription neither could they
share simultaneously with the mining companies.
53. RIOSA VS. VERZOSA (26 PHIL 86)
FACTS:
Sometime prior to December 1, 1909, a judgment was rendered against defendant Verzosa for the sum of
P320.87. An execution was made upon said judgment, in which the property subject of the execution was
purchased by plaintiff Riosa. Subsequently, on January 25, 1910, plaintiff Riosa commenced an action
against the defendants, the purpose of which was to secure an injunction to prevent the defendants form
harvesting and destroying the growing hemp upon a certain parcel of land, to recover damages in the sum
of P500 for injuries already committed upon such land and to require the defendants to deposit the hemp
already harvested with the deputy sheriff.
Upon the presentation of said petition, the judge granted a temporary injunction in conformity with the
prayer of the petition. The defendants were duly served with a summons and a copy of the petition, as well
as with a copy of the injunction granted by the court. However, the defendants failed to appear and answer
the complaint within the time prescribed by law and by reason of such failure, the plaintiff, on the March
21, 1910, presented a motion asking that a judgment by default be rendered against them. Such motion
was granted on the April 2, 1910.
The defendants appeared on April 15, 1910, by their attorney, and the cause was duly brought to trial April
20, 1910. After hearing the evidence, the judge granted a permanent injunction against the defendants,
restraining them from cultivating or harvesting the crops upon the said land or from doing anything thereon
which would tend to injure its value, and also found that the defendants had caused damages to the plaintiff
in the sum of P300.
On September 11, 1910, the defendants were able to redeem the land, in the manner provided for by law,
and later on renewed their motion to have the judgment by default set aside. Trial was duly brought for the
motion on September 17, 1910 to which the judge rendered a decision setting aside the judgment rendered
on Aril 1910. On April 3, 1911, the judge held that the plaintiff was not entitled to the remedy prayed for in
the petition and subsequently dismissed the cause of action with costs against the defendants.
ISSUE(S):
Whether or not the plaintiff has a right to the damages being prayed for in the petition.
RULING:
The Court held that inasmuch as the law permits the owner of the land which has been sold under an
execution to redeem the same within a period of twelve months, the purchaser of the land sold at a public
auction under a writ of execution only has an inchoate right in the property, subject to be defeated and
terminated within the said period of twelve months from the date of sale, by a redemption on the part of
the owner. As held in De la Rosa v. Santos, the purchaser, where the land was in possession of the owner
and not a tenant, is not entitled to recover the rents and profits of the land sold during the period within
which the owner might redeem.
In the present case, the property was in the possession of the owner and the inchoate right of the purchaser
was subject to be defeated at any moment during the period of redemption. The owner was entitled to
remain in the possession of the land sold for the statutory term of twelve months, and she might at any
time defeat the inchoate right obtained by the purchaser by proper redemption within that period. Under
the law it would seem to be difficult to fully understand the right of the plaintiff to interfere in the manner
in which he has attempted to interfere with the owner of the land before the expiration of the twelve
months within which the owner had a right to redeem the land.
The defendants, having redeemed the land in accordance with the provisions of law and within the legal
period, it must follow that the plaintiff was not entitled to the remedy prayed for in his petition and is,
therefore, not entitled to damages resulting from the use and occupation by the defendants.
54. VELASCO VS. ROSENBERG (32 PHIL 72)
FACTS:
On July 14, 1913, plaintiff commenced an action against the defendant in the Court of First Instance of the
city of Manila, with the purpose to recover from the defendant corporation the possession of a certain
parcel of land together with the buildings thereon, more particularly described in the third paragraph of the
complaint, and together with the sum of P500, for each and every month from July 1, 1912, until the same
is delivered to the plaintiff. It was further petitioned by the plaintiff for the appointment of a receiver to
take charge of and conserve the property in litigation during the pendency of the action.
In accordance with the prayer of the petition, on July 14, 1913, a receiver was appointed, who took
possession of the property.
The defendant set up a general and denied that the plaintiff is entitled to the possession of the property in
question. The defendant alleged that the receiver not only took possession of the property described in the
third paragraph of the complaint, but other properties as well. The defendant further alleged that the
plaintiff, through its receiver, fraudulently used the name of Rosenberg, and did solicit and obtain business
from the public by the use of such name, to the damage of the defendant in the sum of P20,000. The
defendant also alleged that he had been damaged by the appointment of the receiver in the sum of P5,000,
together with other damages which the defendant claims to have received from the action of the plaintiff,
and prayed for a judgment against the plaintiff in the sum of P29,350.
After hearing the evidence on trial, the presiding judge found that during the time the plaintiff occupied the
property in question, through its receiver, and used the trade name of the defendant, the latter was
damaged in the sum of P500. The court further found that the receiver took possession of certain personal
properties and retained the same to the damage of the defendant in the sum of P350. Thereafter, the judge
rendered the following judgment: (1) that the plaintiff was entitled to the possession of the parcel of land,
together with the buildings thereon, particularly described in said paragraph three; and (2) that a judgment
be rendered in favor of the defendant and against the plaintiff in the sum of P850.
ISSUE(S):
1. Whether or not the purchaser at an execution sale has a right to the rents and profits of the property sold.
2. Whether or not the defendant has a right to recover damages resulting from a continuance of the business
sold under execution.
RULING:
With reference to the first question, the Court reiterated the principle discussed in the case of De la Rosa
vs. Revita Santos in so far as the right of the purchaser is concerned to collect rent for the property during
the period of redemption when the execution debtor is in possession of the property. In that case, the Court
held: "That, inasmuch as, under the law, the rents received by the purchaser during the period allowed for
redemption must be applied on account of the redemption price, the judgment debtor in possession of such
property should not be required to pay rent, inasmuch as he would thereby imply be paying rent to himself."
With reference to the damage caused to the defendant by the receiver in continuing in the business, the
Court held that inasmuch as the receiver was an officer of the court, appointed thereby for the purpose of
conserving the property, there is a right to assume that he was authorized to do so. That being true, the
question of damages should have been settled in the receiver’s final accounting to the court. There is
nothing in the record in the present case which justifies that part of the judgment of the lower court,
therefore, that part of the judgment in favor of the defendant and against the plaintiff for the sum of P500
must be revoked.
With reference to that part of the judgment of the lower court relating to the P350, the Court held that
there is nothing in the record which shows that the properties taken were not part of those turned over to
the receiver. If it were, then the receiver should have rendered an account for the same in his final report
to the court. If the receiver has not properly reported the same or accounted therefor, an objection might
properly have then been made being that the receiver should be held responsible in case of loss through
negligence or by bad administration of the property given into his care. There is nothing in the record which
shows that the properties have not been properly accounted for or have been negligently lost. Therefore,
nothing in the record justifies the judgment against the plaintiff and in favor of the defendant for its value
and the same must also be revoked.
55. SARMIENTO VS. AGANA (129 SCRA 122)
Facts:
When Ernesto was still courting his wife, the latter's mother had told him the couple could build a residential
houseon the land which Ernesto did at a cost of P8,000.00 to P10,000.00. He assumed that the wife's mother
was the owner of the land and it would be transferred to the spouses.
It subsequently turned out that the land had been titled in the name of Mr. & Mrs. Jose C. Santo, Jr. who,
sold the same to petitioner Sarmiento. SARMIENTO filed an Ejectment suit against them. In the evidentiary
hearings before the Municipal Court, Sarmiento submitted the deed of sale of the land in her favor, which
showed the price to beP15,000.00.
On the other hand, Ernesto testified that the then cost of the residential house would be from P30,000.00
to P40,000.00.Sarmiento refuse to pay and give option to buy the property.
Issue:
1. Whether or not Ernesto was in good faith.
2. Whether or not Sarmiento could exercise both refusal to pay the spouses and give option to purchase.
Held:
1.Yes. The Court agree that Ernesto and wife were builders in good faith in view of the peculiar
circumstances under which they had constructed the residential house. As far as they knew, the LAND was
owned by Ernesto's mother-in-law who, having stated they could build on the property, could reasonably
be expected to later on give them the land.
In regards to builders in good faith, Article 448 of the Code provides:
ART. 448.
The owner of the land on which anything has been built, sown or planted in good faith, shall have the right
to appropriate as his own the works, sowing or planting, after payment of the indemnity provided for in
articles 546and 548, or to oblige the one who built or planted to pay the price of the land, and the one who
sowed, the proper rent. However, the builder or planter cannot be obliged to buy the land if its value is
considerably more than that of the building or trees. In such case, he shall pay reasonable rent, if the owner
of the land does not choose to appropriate the building or trees after proper indemnity. The parties shall
agree upon the terms of the lease and in case of disagreement, the court shall fix the terms thereof.
2. No. The owner of the building erected in good faith on a land owned by another, is entitled to retain the
possession of the land until he is paid the value of his building, under article 453 (now Article 546).
The owner, of the land upon, the other hand, has the option, under article 361 (now Article 448),either to
pay for the building or to sell his land to the owner of the building.
But he cannot, as respondents here did, refuse both to pay for the building and to sell the land
and compel the owner of the building to remove it from the land where it is erected. He is entitled to such
remotion only when, after having chosen to sell his land, the other party fails to pay for the same. We hold,
therefore, that the order of Judge Natividad compelling defendants-petitioners to remove their buildings
from the land belonging to plaintiffs-respondents only because the latter chose neither to pay for such
buildings nor to sell the land, is null and void, for it amends substantially the judgment sought to be executed
and is, furthermore, offensive to articles 361 (nowArticle 448) and 453 (now Article 546) of the Civil Code.
56. BALUCANAG VS. JUDGE FRANCISCO (GR NO. L-34199)
Facts:
• Balucanag bought the land from Mrs. Charvet that was leased by Richard Stohner for a period of 5 years
with the following agreements: 40.00 monthly rental to be paid in advance during the first 10 days of the

month, and that Stohner may make such improvements to the leased land provided that he should remove
that improvements within a period of 2 months after the expiration of the agreement otherwise, the lessor
may remove the said buildings/improvements at the expense of the lessee.
• During the existence of the lease, Stohner made some fillings and built a house. Said improvements were
valued at 35,000;
• When Stohner failed to pay his rents, the counsel of Balucanag wrote a demand letter that he vacate the
premises. Stohner replied thru his counsel that he was a builder in good faith.
Issue:
WON Stohner is a builder in good faith
Held:
• Respondent Stohner cannot be considered a builder in good faith Article 448 of the Civil Code, relied upon
by respondent judge, applies only to a case where one builds on land in the belief that he is the owner
thereof and it does not apply where one's only interest in the land is that of a lessee under a rental contract.
In the case at bar, there is no dispute that the relation between Balucanag and Stohner is that of lessor and
lessee, the former being the successor in interest of the original owner of the lot.
• ". . . the principle of possessor in good faith refers only to a party who occupies or possess property in the
belief that he is the owner thereof and said good faith ends only when he discovers a flaw in his title so as
to reasonably advise or inform him that after all he may not be the legal owner of said property. It cannot
apply to a lessee because as such lessee he knows that he is not the owner of he leased premises. Neither
can he deny the ownership or title of his lessor. . . . A lessee who introduces improvements in the leased
premises, does so at his own risk in the sense that he cannot recover their value from the lessor, much less
retain the premises until such reimbursement. . . ."
57. FLOREZA VS. EVANGELISTA (96 SCRA 130)
Plaintiffs Maria de Evangelista and Sergio Evangelista, who are mother and son, (the EVANGELISTAS, for
short) are the owners of a residential lot located at Sumilang St., Tanay, Rizal, with an area of 204.08 sq.
ms., assessed at P410.00.
In May 1945, the EVANGELISTAS borrowed from FLOREZA the amount of P100.00. On or about November
1945, with the consent of the EVANGELISTAS, FLOREZA occupied the above residential lot and built thereon
a house of light materials (barong-barong) without any agreement as to payment for the use of said
residential lot owing to the fact that the EVANGELISTAS has then a standing loan of P100.00 in favor of
FLOREZA. 1
On the following dates, the EVANGELISTAS again borrowed the indicated amounts: September 16, 1946 -
P100.00; 2 August 17, 1947 — P200.00; 3 January 30, 1949 — P200.00; 4 April 1, 1949 — P140.00, 5 or a
total of P740.00 including the first loan. The last three items are evidenced by private documents stating
that the residential lot stands as security therefor and that the amounts covered thereunder are payable
within six years from date, without mention of interest. The document executed on September 16, 1946
stated specifically that the loan was without interest "walang anumang patubo."
On January 10, 1949, FLOREZA demolished this house of light materials and in its place constructed one of
strong materials assessed in his name at P1,410.00 under Tax Declaration No. 4448. FLOREZA paid no rental
as before.
On August 1, 1949, the EVANGELISTAS, for and in consideration of P1,000.00 representing the total
outstanding loan of P740.00 plus P260.00 in cash, sold their residential lot to FLOREZA, with a right to
repurchase within a period of 6 years from date, or up to August 1, 1955, as evidenced by a notarial
document, Exh. B, registered under Act 3344 on December 6, 1949, as Inscription No. 2147. 7
On January 2, 1955, or seven months before the expiry of the repurchase period, the EVANGELISTAS paid in
full the repurchase price of P1,000.00.
On April 25, 1956, the EVANGELISTAS, through their counsel, wrote FLOREZA a letter 8 asking him to vacate
the premises as they wanted to make use of their residential lot besides the fact that FLOREZA had already
been given by them more than one year within which to move his house to another site. On May 4, 1956,
the EVANGELISTAS made a formal written demand to vacate, within five days from notice, explaining that
they had already fully paid the consideration for the repurchase of the lot. 9 FLOREZA refused to vacate
unless he was first reimbursed the value of his house. Hence, the filing of this Complaint on May 18, 1956
by the EVANGELISTAS.
During the pendency of this appeal, petitioner Maria D. de Evangelista died and was ordered substituted by
her son, petitioner Sergio, as her legal representative, in a Resolution dated May 14, 1976. On October 20,
1978, the EVANGELISTAS filed a Motion to Dismiss stating that FLOREZA had since died and that his heirs
had voluntarily vacated the residential lot in question. The date FLOREZA passed away and the date his heirs
had voluntarily vacated the property has not been stated.
ISSUES:
1. WON petitioner Floreza was a builder in bad faith and WON the EVANGELISTAS should also be held in bad
faith, so that both of them being in bad faith, Article 453 of the Civil Code should apply
2. WON petitioner IS entitled to reimbursement for the value of his house and WON he should remove the
same at his expense
3. WON petitioner should vacate respondents' lot in question and to pay rentals commencing until he shall
have vacated the premises
HELD:
1. We uphold the Court of Appeals in its conclusion that Article 448 of the Civil Code is inapplicable to the
factual milieu herein. Said codal provision applies only when the builder, planter, or sower believes he had
the right so to build, plant or sow because he thinks he owns the land or believes himself to have a claim of
title. 13 In this case, petitioner makes no pretensions of ownership whatsoever.
Petitioner concedes that he was a builder in bad faith but maintains that the EVANGELISTAS should also be
held in bad faith, so that both of them being in bad faith, Article 453 of the Civil Code 14 should apply. By
the same token, however, that Article 448 of the same Code is not applicable, neither is Article 453 under
the ambiance of this case.
2. Would petitioner, as vendee a retro, then be entitled to the rights granted in Article 1616 of the Civil Code
(Art. 1518 of the old Code)? To quote:
"Art. 1616.The vendor cannot avail himself of the right of repurchase without returning to the vendee the
price of the sale, and in addition:
(1)The expenses of the contract, and any other legitimate payments made by reason of the sale;
(2)The necessary and useful expenses made on the thing sold."

The question again calls for a negative answer. It should be noted that petitioner did not construct his house
as a vendee a retro. The house had already been constructed as far back as 1949 (1945 for the house of light
materials) even before the pacto de retro sale in 1949. Petitioner incurred no useful expense, therefore,
after that sale. The house was already there at the tolerance of the EVANGELISTAS in consideration of the
several loans extended to them. Since petitioner cannot be classified as a builder in good faith within the
purview of Article 448 of the Civil Code, nor as a vendee a retro, who made useful improvements during the
lifetime of the pacto de retro, petitioner has no right to reimbursement of the value of the house which he
had erected on the residential lot of the EVANGELISTAS, much less to retention of the premises until he is
reimbursed. The rights of petitioner are more akin to those of a usufructuary who, under Article 579 of the
Civil Code (Art. 487 of the old- Code), may make on the property useful improvements but with no right to
be indemnified therefor. He may, however, remove such improvements should it be possible to do so
without damage to the property: For if the improvements made by the usufructuary were subject to
indemnity, we would have a dangerous and unjust situation in which the usufructuary could dispose of the
owner's funds by compelling him to pay for improvements which perhaps he would not have made.
3. We come now to the issue of rentals. It is clear that from the date that the redemption price had been
paid by the EVANGELISTAS on January 2, 1955, petitioner's right to the use of the residential lot without
charge had ceased. Having retained the property although a redemption had been made, he should be held
liable for damages in the form of rentals for the continued use of the subject residential lot 16 at the rate
of P10.00 monthly from January 3, 1955, and not merely from the date of demand on May 4, 1956, as held
by the Court of Appeals, until the house was removed and the property vacated by petitioner or his heirs.
58. FILIPINAS COLLEGES, INC. VS. TIMBANG (GR NO. L-12812)
Facts: This is an appeal taken from an order of the Court of First Instance of Manila dated May 10, 1957 (a)
declaring from the Sheriff's certificate of sale covering a school building sold at public auction null and void
within 15 days from notice of said order. The successful bidders, defendant-appellants, spouses Maria
Garcia Timbang and Marcelino Timbang shall pay to, appelle, Maria Gervacio Blas directly or through the
Sheriff of Manila, the sum of Php5,750, that the spouses Timbang had bid for the building at the Sheriff's
sale; (b) that the other appelle Filipinas Colleges, Inc. owner of 34,500/3,285,934 undivided interest in Lot
2-A covered by certificate of title no. 45970 on which the building sold in auction sale is situated; and (c)
ordering the sale in public auction of the said undivided interest of the Filipinas Colleges, Inc. in the amount
of Php8,200 minus the sum of Php5,750 mentioned in (a) above. The order appealed from is the result of
three motions filed in court a quo in the course of the execution of a final judgment of the Court of Appeals
rendered in 2 cases appealed to it in which the spouses Timbang, the Filipinas Colleges, Inc., and Maria
Gervacio Blas were the parties. The spouses Timbang presented their opposition to each and all of this
motion. In assailing the order of the court a quo directing the appellants to pay the appellee Blas the amount
of their bid (Php5,750) made at the public auction, the appellants' counsel has presented a novel albeit
ingenious, argument. They contend that since the builder in good faith has failed to pay the price of the land
after the owners thereof exercised their option under Article 448 of the Civil Code, the builder has lost his
right and the appellants as owners of the land became the owners ipso facto.
Issue:
1. WON the contention of the appellants is valid. If not, what are the remedies left to the owners of the
land if the builder fails to pay?
2.WON the appellants, as owners of the land, may seek the recovery of the value of their land by writ of
execution; levy the house of the builder and sell it in public auction.
Held/Rationale:
NO, the appellants contention is superfluous. There is nothing in the language of these two articles
448 & 546, which would justify the conclusion of the appellants, that, upon the failure of the builder to pay
the value of the land, when such is demanded by the landowner, the latter becomes automatically the
owner of the improvement under Article 445. Although it is true, it was declared therein that in the event
of the failure of the builder to pay the land after the owner thereof has chosen this alternative, the builder's
right of retention provided in Article 546 is lost, nevertheless there was nothing said that as a consequence
thereof, the builder loses entirely all rights over his own building. The remedy left to the parties in such
eventuality in which the builder fails to pay the value of the land, though the Code is silent on this Court, a
builder in good may not be required to pay rentals. He has right to retain the land on which he has built in
good faith until he is reimbursed with the expenses incurred by him. Possibly he might be made to pay rental
only when the owner of the land chooses not to appropriate the improvements and requires the builder in
good faith to pay for the land but that the builder is unwilling or unable to pay the land, and they decide to
leave things as they are and assume the relation of lessor-lessee, and should they disagree as to the amount
of rental then they could to the court to fix that amount.
The second contention was without merit. In the instant case, the Court of Appeals has already
adjudged that appellee Blas is entitled to the payment of the unpaid balance of the purchase price of the
school building. With respect to the order of the court declaring appellee Filipinas Colleges, Inc., part owner
of the land to the extent of the value of its personal properties sold at public auction in favor of the
Timbangs. This Court likewise finds the same as justified, for such represents, in effect, a partial payment of
the value of the land. Failure of the Timbang spouses to pay to the Sheriff or to Maria Gervacio Blas said
sum of Php5,750 within 15 days from notice of the final judgment, an order of execution shall issue in favor
of Maria Gervacio Blas to be levied upon all the properties of the Timbang spouses not exempt from
execution as satisfaction for the said amount.
59. PNB VS. DE JESUS (GR NO. 149295)
Facts: Respondent filed a case in the RTC for recovery of ownership and possession, with damages over a
portion of the land it owns that is being encroached to an extent of 124 sq.m. by petitioner’s building.
Petitioners, on the other hand, claimed that when it acquired the said building from a certain Mayor Ignacio,
he was informed that said building encroached a portion of said land, and to remedy it, such portion was
also sold to him and latter accepted. Such sale did not materialize because said land was mortgage to DBP
without petitioner’s consent. The RTC promulgated a decision in favor of respondents and was affirmed by
the CA.
Issue:
(1) WON PNB is in good faith as it claims to be?
(2) WON Art. 448 is applicable to this case?
Held:
(1) No, PNB is not in good faith. SC said, petitioner was quite aware, and indeed advised, prior to its
acquisition of the land and building from Ignacio that a part of the building sold to it stood on the land not
covered by the land conveyed to it. Contrary, GOOD FAITH under Art. 448 one is considered in good faith if
he is not aware that there exists in his title or mode of acquisition any flaw which invalidates it. It’s essence
lies in an honest belief in the validity of one's right, ignorance of a superior claim, and absence of intention
to overreach another.
(2) Not applicable. Article 448, of the Civil Code refers to a piece of land whose ownership is claimed by two
or more parties, one of whom has built some works (or sown or planted something) and NOT to a case
where the owner of the land is the builder, sower, or planter who then later loses ownership of the land by
sale or otherwise for, elsewise stated, "where the true owner himself is the builder of works on his own
land, the issue of good faith or bad faith is entirely irrelevant." In this case, petitioner was not the one who
built the building but rather it was already built by Mayor Ignacio when it acquired, thus such case does not
fall in Art. 448.
60. PARILLA, ET. AL. VS. PILAR (GR NO. 167680)
FACTS:
Petitioners, as dealers of Pilipinas Shell Petroleum Corporation, have been in possession of a parcel of land
in Ilocos Sur, which was leased to it by the respondent under a 10-year Lease Agreement entered into in
1990. When the lease contract between Pilipinas Shell and the respondent expired in 2000, petitioners
remained in possession of the property on which they built improvements consisting of a billiard hall and a
restaurant, maintained a sari-saristore and allowed the use of a portion thereof as parking lot. Despite
demands to vacate, petitioners and the other occupants remained in the property.
Hence, respondent who has been residing in the United States, through his attorney-in-fact, filed on
February 4, 2002 a complaint for ejectment before the MTC with prayer for the issuance of a writ of
preliminary injunction with damages against petitioners and the other occupants of the property. The MTC,
by its decision on February 3, 2003, ordered the petitioners and their co-defendants and all persons claiming
rights under them to vacate the property and to pay the respondent the amount of P50,000 as reasonable
compensation for the use of the property and P10,000 as attorney’s fees and to pay cost of suit. It also
ordered the respondent to reimburse the defendants the amount of P2,000,000 representing the value of
the improvements introduced on the property.
The respondent appealed to the RTC part of the MTC’s decision which ordered him to reimburse the
petitioners for the value of the improvements. In setting aside the questioned order, the RTC, applying
Article 546 of the New Civil Code (NCC), held that the petitioners’ tolerated occupancy could not be
interpreted to mean that they are builders or possessors in good faith and that for one to be a builder in
good faith, it is assumed that he claims title to the property which is not the case of the petitioners.
Petitioners, in their petition for review to the SC, argue that since neither the respondent nor his agents or
representatives performed any act to prevent them from introducing the improvements, the applicable
provision in this case would be Article 453 of the NCC. Petitioners further allege that being builders in good
faith, until they are reimbursed of the value of the improvements they had introduced on the property, they

have the right of retention or occupancy thereof pursuant to Article 448, in relation to Article 546, of the
New Civil Code, otherwise, respondent would be unjustly enriched at their expense.
ISSUE(S):
Whether or not the petitioners have the right to retain the property until reimbursement of the value of the
improvements is made by respondent.
RULING:
The petition should fail.
It was shown that in 1960, a lease contract over the property was forged between Shell Company of the
Philippines Limited and respondent's predecessors-in-interest. In 1990, the lease contract was renewed by
Pilipinas Shell and respondent. Petitioners, being dealers of Pilipinas Shell's petroleum products, were
allowed to occupy the property. Petitioners are thus considered agents of Pilipinas Shell. The facts of the
instant case calls then for the application of the provisions on lease under the New Civil Code.
The right of the lessor upon the termination of a lease contract with respect to useful improvements
introduced on the leased property by a lessee is covered by Article 1678 of the NCC which reads: “If the
lessee makes, in good faith, useful improvements which are suitable to the use for which the lease is
intended, without altering the form or substance of the property leased, the lessor upon the termination of
the lease shall pay the lessee one-half of the value of the improvements at that time. Should the lessor
refuse to reimburse said amount, the lessee may remove the improvements, even though the principal thing
may suffer damage thereby. He shall not, however, cause any more impairment upon the property leased
than is necessary.”
The above provision is a modification of the Old Code under which the lessee had no right at all to be
reimbursed for the improvements introduced on the leased property, since the lessee is being entitled
merely to the rights of a usufructuary - right of removal and set-off, but not of reimbursement. The
modificiation introduced in the NCC on partial reimbursement was intended to prevent unjust enrichment
on the part of the lessor which now has to pay one-half of the value of the improvements at the time the
lease terminates because the lessee has already enjoyed the same, whereas the lessor could enjoy them
indefinitely thereafter.
Since the law on lease under the NCC has specific rules concerning useful improvements introduced by a
lessee on the property leased, it is erroneous to apply Article 448, in relation to Article 546. As jurisprudence
would show, Article 448 covers only cases in which builders, sowers or planters believe themselves to be
owners of the land, or at least, have a claim of title thereto, but not when the interest is merely that of a
holder, such as a mere tenant, agent or usufructuary. A tenant cannot be said to be a builder in good faith
as he has no pretension to be owner.
Thus, in the case at bar, it is the lessor, applying Article 1678, who is given the option upon termination of
the lease contract either to appropriate the useful improvements by paying one-half of the value of their
value at that time, or to allow the lessee to remove the improvements.
61. ISMAEL MACASAET, ET. AL. VS. SPOUSES MACASAET (GR NOS. 154391-92)
Facts:

Petitioners Ismael and Teresita Macasaet and respondents Vicente and Rosario Macasaet are first-degree
relatives. Ismael is the son of respondents, and Teresita is his wife.
On December 10, 1997, the parents filed with the Municipal Trial Court in Cities (MTCC) of Lipa City an
ejectment suit against the children. Respondents alleged that they were the owners of two (2) parcels of
land covered by Transfer Certificate of Title (TCT) Nos. T-78521 and T-103141, situated at Banay-banay, Lipa
City; that by way of a verbal lease agreement, Ismael and Teresita occupied these lots in March 1992 and
used them as their residence and the situs of their construction business; and that despite repeated
demands, petitioners failed to pay the agreed rental of P500 per week
Ismael and Teresita denied the existence of any verbal lease agreement. They claimed that respondents had
invited them to construct their residence and business on the subject lots in order that they could all live
near one other, employ Marivic (the sister of Ismael), and help in resolving the problems of the family. They
added that it was the policy of respondents to allot the land they owned as an advance grant of inheritance
in favor of their children. Thus, they contended that the lot covered by TCT No. T-103141 had been allotted
to Ismael as advance inheritance. On the other hand, the lot covered by TCT No. T-78521 was allegedly given
to petitioners as payment for construction materials used in the renovation of respondents' house.
Issue: (related to the subject)

Whether or not Article 1678 of the Civil Code should apply to the case on the matters of improvements,
or is it Article 447 of the Civil Code in relation to the Article 453 and 454 thereof that should apply, if ever
to apply the Civil Code
Held:
To better understand the main issue, it is important to note that the possession of the petitioner is not
merely a tolerated possession.
The Court has consistently held that those who occupy the land of another at the latter's tolerance or
permission, without any contract between them, are necessarily bound by an implied promise that the
occupants will vacate the property upon demand. A summary action for ejectment is the proper remedy to
enforce this implied obligation. The unlawful deprivation or withholding of possession is to be counted from
the date of the demand to vacate.
Toleration is defined as "the act or practice of permitting or enduring something not wholly approved of."
We hold that the facts of the present case rule out the finding of possession by mere tolerance. Petitioners
were able to establish that respondents had invited them to occupy the subject lots in order that they could
all live near one other and help in resolving family problems. By occupying those lots, petitioners
demonstrated their acceptance of the invitation. Hence, there was a meeting of minds, and an agreement
regarding possession of the lots impliedly arose between the parties.
Main Issue (related to our subject)

As applied to the present case, accession refers to the right of the owner to everything that is incorporated
or attached to the property. 60 Accession industrial — building, planting and sowing on an immovable — is
governed by Articles 445 to 456 of the Civil Code.

Articles 447 and 1678 of the Civil Code Inapplicable
To buttress their claim of reimbursement for the improvements introduced on the property, petitioners cite
Article 447. 61 They allege that the CA erred in applying Article 1678, since they had no lease agreement
with respondents.
We clarify. Article 447 is not applicable, because it relates to the rules that apply when the owner of the
property uses the materials of another. It does not refer to the instance when a possessor builds on the
property of another, which is the factual milieu here.
In view of the unique factual setting of the instant case, the contention of petitioners regarding the
inapplicability of Article 1678 deserves attention. The CA applied the provisions on lease, because it found
their possession by mere tolerance comparable with that of a lessee, per the pronouncement in Calubayan
v. Pascual, from which we quote:
". . . It has been held that a person who occupies the land of another at the latter's tolerance or permission,
without any contract between them, is necessarily bound by an implied promise that he will vacate upon
demand, failing which a summary action for ejectment is the proper remedy against them. The status of
defendant is analogous to that of a lessee or tenant whose term of lease has expired but whose occupancy
continued by tolerance of the owner. In such a case, the unlawful deprivation or withholding of possession
is to be counted from the date of the demand to vacate."
Ismael and Teresita's possession of the two lots was not by mere tolerance, a circumstance that negates the
applicability of Calubayan case.
Article 448 Applicable

On the other hand, when a person builds in good faith on the land of another, the applicable provision is
Article 448, which reads:
"Article 448. The owner of the land on which anything has been built, sown or planted in good faith, shall
have the right to appropriate as his own the works, sowing or planting, after payment of the indemnity
provided for in Articles 546 and 548, or to oblige the one who built or planted to pay the price of the land,
and the one who sowed, the proper rent. However, the builder or planter cannot be obliged to buy the land
if its value is considerably more than that of the building or trees. In such case, he shall pay reasonable rent,
if the owner of the land does not choose to appropriate the building or trees after proper indemnity. The
parties shall agree upon the terms of the lease and in case of disagreement, the court shall fix the terms
thereof."
This Court has ruled that this provision covers only cases in which the builders, sowers or planters believe
themselves to be owners of the land or, at least, to have a claim of title thereto. It does not apply when the
interest is merely that of a holder, such as a mere tenant, agent or usufructuary. From these
pronouncements, good faith is identified by the belief that the land is owned; or that — by some title —
one has the right to build, plant, or sow thereon.
However, in some special cases, this Court has used Article 448 by recognizing good faith beyond this limited
definition. Thus, in Del Campo v. Abesia, this provision was applied to one whose house — despite having
been built at the time he was still co-owner — overlapped with the land of another. This article was also

applied to cases wherein a builder had constructed improvements with the consent of the owner. The Court
ruled that the law deemed the builder to be in good faith. In Sarmiento v. Agana, the builders were found
to be in good faith despite their reliance on the consent of another, whom they had mistakenly believed to
be the owner of the land.
Based on the aforecited special cases, Article 448 applies to the present factual milieu. The established facts
of this case show that respondents fully consented to the improvements introduced by petitioners. In fact,
because the children occupied the lots upon their invitation, the parents certainly knew and approved of
the construction of the improvements introduced thereon. Thus, petitioners may be deemed to have been
in good faith when they built the structures on those lots.
The instant case is factually similar to Javier v. Javier. In that case, this Court deemed the son to be in good
faith for building the improvement (the house) with the knowledge and consent of his father, to whom
belonged the land upon which it was built. Thus, Article 448 was applied.
Rule on Useful Expenses

The structures built by petitioners were "useful" improvements, because they augmented the value or
income of the bare lots. Thus, the indemnity to be paid by respondents under Article 448 is provided for by
Article 546, which we quote:
"Art. 546.Necessary expenses shall be refunded to every possessor; but only the possessor in good faith
may retain the thing until he has been reimbursed therefor.
"Useful expenses shall be refunded only to the possessor in good faith with the same right of retention, the
person who has defeated him in the possession having the option of refunding the amount of the expenses
or of paying the increase in value which the thing may have acquired by reason thereof."
Consequently, respondents have the right to appropriate — as their own — the building and other
improvements on the subject lots, but only after (1) refunding the expenses of petitioners or (2) paying the
increase in value acquired by the properties by reason thereof. They have the option to oblige petitioners
to pay the price of the land, unless its value is considerably more than that of the structures — in which
case, petitioners shall pay reasonable rent.
In accordance with Depra v. Dumlao, this case must be remanded to the trial court to determine matters
necessary for the proper application of Article 448 in relation to Article 546. Such matters include the option
that respondents would take and the amount of indemnity that they would pay, should they decide to
appropriate the improvements on the lots. We disagree with the CA's computation of useful expenses,
which were based only on petitioners' bare allegations in their Answer.
Ruling on Improvement Justified

While, ordinarily, the jurisdiction of the MTCC on ejectment proceedings is limited to the issue of physical
or material possession of the property in question, this Court finds it necessary to abbreviate the issue on
the improvements in relation to Article 448. First, the determination of the parties' right to those
improvements is intimately connected with the MTCC proceedings in the light of the ejectment of
petitioners. Second, there is no dispute that while they constructed the improvements, respondents owned
the land. Third, both parties raised no objection when the RTC and the CA ruled accordingly on this matter.

Equitable considerations compel us to settle this point immediately, pro hoc vice, to avoid needless delay.
Both parties have already been heard on this issue; to dillydally or equivocate would not serve the cause of
substantial justice.
62. KILARIO VS. COURT OF APPEALS (GR NO. 134329)
Facts:
One Jacinto Pada had six (6) children, namely, Marciano, Ananias, Amador, Higino, Valentina and Ruperta.
He died intestate. His estate included a parcel of land of residential and coconut land located at Poblacion,
Matalom, Leyte, denominated as Cadastral Lot No. 5581 with an area of 1,301.92 square meters. It is the
northern portion of Cadastral Lot No. 5581 which is the subject of the instant controversy.
During the lifetime of Jacinto Pada, his half-brother, Feliciano Pada, obtained permission from him to build
a house on the northern portion of Cadastral Lot No. 5581. When Feliciano died, his son, Pastor, continued
living in the house together with his eight children. Petitioner Verona Pada-Kilario, one of Pastor's children,
has been living in that house since 1960.
Sometime in May, 1951, the heirs of Jacinto Pada entered into an extra-judicial partition of his estate. For
this purpose, they executed a private document which they, however, never registered in the Office of the
Registrar of Deeds of Leyte.
At the execution of the extra-judicial partition, Ananias was himself present while his other brothers were
represented by their children. Their sisters, Valentina and Ruperta, both died without any issue. Marciano
was represented by his daughter, Maria; Amador was represented by his daughter, Concordia; and Higino
was represented by his son, Silverio who is the private respondent in this case. It was to both Ananias and
Marciano, represented by his daughter, Maria, that Cadastral Lot No. 5581 was allocated during the said
partition. When Ananias died, his daughter, Juanita, succeeded to his right as co-owner of said property.
Later on, it was contended that the extra-judicial partition of the estate of Jacinto Pada executed in 1951
was invalid and ineffectual since no special power of attorney was executed by either Marciano, Amador or
Higino in favorof their respective children who represented them in the extra-judicial partition. Moreover,
it was effectuated only through a private document that was never registered in the office of the Registrar
of Deeds of Leyte.
Issue:
• WON Petitioner is a co-owner of the controversial property given that the heirs of Jacinto Pada donated
to the Petitioner
• WON petitioners are builders in good faith
HELD:
• The extrajudicial partition of the estate of Jacinto Pada among his heirs made in 1951 is valid, albeit
executed in an unregistered private document. No law requires partition among heirs to be in writing and
be registered in order to be valid. The requirement in Sec. 1, Rule 74 of the Revised Rules of Court that a
partition be put in a public document and registered, has for its purpose the protection of creditors and the
heirs themselves against tardy claims. The object of registration is to serve as constructive notice to others.
It follows then that the intrinsic validity of partition not executed with the prescribed formalities is not
undermined when no creditors are involved. Without creditors to take into consideration, it is competent
for the heirs of an estate to enter into an agreement for distribution thereof in a manner and upon a plan
different from those provided by the rules from which, in the first place, nothing can be inferred that a
writing or other formality is essential for the partition to be valid. The partition of inherited property need
not be embodied in a public document so as to be effective as regards the heirs that participated therein.
The requirement of Article 1358 of the Civil Code that acts which have for their object the creation,
transmission, modification or extinguishment of real rights over immovable property, must appear in a
public instrument, is only for convenience, non-compliance with which does not affect the validity or
enforceability of the acts of the parties as among themselves. And neither does the Statute of Frauds under
Article 1403 of the New Civil Code apply because partition among heirs is not legally deemed a conveyance
of real property, considering that it involves not a transfer of property from one to the other but rather, a
confirmation or ratification of title or right of property that an heir is renouncing in favor of another heir
who accepts and receives the inheritance. The extrajudicial partition which the heirs of Jacinto Pada
executed voluntarily and spontaneously in 1951 has produced a legal status. When they discussed and
agreed on the division of the estate of Jacinto Pada, it is presumed that they did so in furtherance of their
mutual interests. As such, their division is conclusive, unless and until it is shown that there were debts
existing against the estate which had not been paid. No showing, however, has been made of any unpaid
charges against the estate of Jacinto Pada. Thus, there is no reason why the heirs should not be bound by
their voluntary acts.
• Considering that petitioners were in possession of the subject property by sheer tolerance of its owners,
they knew that their occupation of the premises may be terminated any time. Persons who occupy the land
of another at the latter's tolerance or permission, without any contract between them, is necessarily bound
by an implied promise that they will vacate the same upon demand, failing in which a summary action for
ejectment is the proper remedy against them. Thus, they cannot be considered possessors nor builders in
good faith. It is well-settled that both Article 448 and Article 546 of the New Civil Code which allow full
reimbursement of useful improvements and retention of the premises until reimbursement is made, apply
only to a possessor in good faith, i.e., one who builds on land with the belief that he is the owner thereof.
Verily, persons whose occupation of a realty is by sheer tolerance of its owners are not possessors in good
faith.
63. IGNACIO VS. DIRECTOR OF LANDS AND VALERIANO (GR NO. L-12958)
*See Case No. 16 (108 Phil 335)
64. DE BUYSER VS. DIRECTOR OF LANDS, ET. AL. (GR NO. L-22763)
FACTS: This is an appeal, perfected before the effectivity of Republic Act 5440, from the decision of the
Court of First Instance of Surigao, declaring a parcel of land formed along the shore by the action of the sea
as part of the public domain.
Plaintiff-appellant is the registered owner of Lot No. 4217 of the Surigao Cadastre, which borders the Surigao
Strait. Contiguous to said lot is a parcel of land which was formed by accretion from the sea, the subject-
matter of this controversy. Defendants Ignacio Tandayag and his wife CANDIDA Tandayag have been
occupying this foreshore land order a Revocable Permit issued by the Director of Lands. For the use and
occupation thereof, said spouses paid the Bureau of Lands the amount of P6.50 annually. They have a house
on said lot, which plaintiff alleged had been purchased by the Tandayags from one Francisco Macalinao, a
former lessee of the plaintiff. llcd

Claiming ownership of the said land, plaintiff filed an action against the spouses Tandayag in the Court of
First Instance of Surigao to recover possession of this land as well as rents in arrears for a period of six years.
The complaint was subsequently amended to implead the Director of Land as defendant, allegedly for
having illegally issued a revocable permit to the Tandayags.
ISSUE: WON plaintiff has a claim of ownership over the land in question
HELD:
The plaintiff's claim of ownership over the land in question is bereft of legal basis. Such alluvial formation
along the seashore is part of the public domain and, therefore, not open to acquisition by adverse
possession by private persons. It is outside the commerce of man, unless otherwise declared by either the
executive or legislative branch of the government. 1
In asserting the right of ownership over the land, plaintiff invokes Article 4 of the Spanish Law of Waters of
August 3, 1866 which provides:
"Art. 4.Lands added to the shore by accretion and alluvial deposits caused by the action of the sea, form
part of the public domain, when they are no longer washed by the waters of the sea, and are not necessary
for purposes of public utility, or for the establishment of special industries, or for the coastguard service,
the Government shall declare them to be the property of the owners of the estate adjacent thereto and as
an increment thereof."
Plaintiff's reliance on the above article is quite misplaced. The true construction of the cited provision is that
the State shall grant these lands to the adjoining owners only when they are no longer needed for the
purposes mentioned therein. In the case at bar, the trial court found that plaintiff's evidence failed to prove
that the land in question is no longer needed by the government, or that the essential conditions for such
grant under Article 4 of the Spanish Law of Waters, exists. prcd
Plaintiff, however, argues that the approval by the Director of Lands of the defendants' Revocable Permit
Application is tantamount to an implied declaration on the part of the Director of Lands of the fact that the
disputed lot is no longer needed for public use. We fail to see such implication. In his letter, dated June 16,
1955, approving the defendants' Revocable Permit Application, the Director of Lands did not declare the
land as no longer needed for public use.
Since the land is admittedly property of public dominion, its disposition falls under the exclusive supervision
and control of the Bureau of Lands. 3 Under the Public Land Act, an application for the sale or lease of lands
enumerated under Section 59 thereof, should be filed with the Bureau of Lands. 4 In compliance therewith,
the spouses Tandayag filed the appropriate application, while plaintiff did not. In fine, the grant of a
Revocable Permit to the defendants Tandayag for the temporary use and occupation of the disputed land
is valid, having been legally issued by the Bureau of Lands, acting for and in behalf of the Secretary (now
Minister) of Agriculture and Natural Resources who is empowered to grant revocable permits under Section
68 of the Public Land Act which we quote:
"The Secretary of Agriculture and Natural Resources may grant to qualified persons temporary permission
upon the payment of a reasonable charge, for the use of any portion of the lands covered by this chapter
for any lawful private purpose, subject to revocation, at any time when, in his judgment the public interest
shall require."

65. GRANDE, ET. AL. VS. HON. COURT OF APPEALS (GR NO. L-17652)
Facts: The Grandes are owners of a parcel of land in Isabela, by inheritance from their deceased mother,
Patricia Angui, who likewise, inherited it from her parents. In the early 1930’s, the Grandes decided to have
their land surveyed for registration purposes. The land was described to have Cagayan River as the
northeastern boundary, as stated in the title.
By 1958, a gradual accretion took place due to the action of the current of the river, and an alluvial
deposit of almost 20,000 sq.m. was added to the registered area. The Grandes filed an action for quieting
of title against the Calalungs, stating that they were in peaceful and continuous possession of the land
created by the alluvial deposit until 1948, when the Calalungs allegedly trespassed into their property. The
Calalungs, however, stated that they were the rightful owners since prior to 1933.
The CFI found for the Grandes and ordered the Calalungs to vacate the premises and pay for damages.
Upon appeal to the CA, however, the decision was reversed.
Issue: Whether or not the alluvium deposited land automatically belongs to the riparian owners?
Held: Art. 457 dictates that alluvium deposits on land belong to the owners of the adjacent land. However,
this does not ipso jure become theirs merely believing that said land have become imprescriptible. The land
of the Grandes only specifies a specific portion, of which the alluvial deposits are not included, and are thus,
subject to acquisition by prescription.
Since the Calalungs proved that they have been in possession of the land since 1934 via two credible
witnesses, as opposed to the Grande’s single witness who claims that the Calalungs only entered the land
in 1948, the Calalungs have been held to have acquired the land created by the alluvial deposits by
prescription. This is because the possession took place in 1934, when the law to be followed was Act 190,
and not the New Civil Code, which only took effect in 1950.
66. REPUBLIC VS. COURT OF APPEALS, ET. AL. (GR NO. 61647)
Facts: Respondents Tancinco’s claim as Riparian owners sought for the registration of lots 2 & 3 as accretions
to their adjacent lands (fishponds) found near the Meycauayan River. Both the RTC and the CA had the same
findings and approved the applications of said respondents. On the other hand, petitioner Republic claims
that there was no accretion to speak of under Art. 457 but rather it was artificial and man-made due to
respondents transfer of dikes near the river bed thus falling short of the requirement of Art. 457 that
accretion should be natural.
Issue: WON there was accretion under Art. 457?
Held: NO accretion. For Art. 457 to apply, it requires the concurrence of three requisites before an accretion
covered by this particular provision is said to have taken place: (1) that the deposit be gradual and
imperceptible; (2) that it be made through the effects of the current of the water; and (3) that the land
where accretion takes place is adjacent to the banks of rivers. The SC claimed that there is no evidence
whatsoever to prove that the addition to the said property was made gradually through the effects of the
current of the Meycauayan and Bocaue rivers. SC also refuted the claim of the lone witness of the

respondents that if the accretion of 4 hectares took place on 1939 and she testified on same year, then the
accretion could have been SUDDEN which was impossible. Furthermore, what the SC gave more credence
is that there was evidence that the alluvial deposits were MAN-MADE and ARTIFICIAL, it claimed, “the
alleged alluvial deposits came into being not because of the sole effect of the current of the rivers but as a
result of the transfer of the dike towards the river and encroaching upon it.” SC simply states that what
transpired in this case is not accretion but rather an encroachment of a portion of the river by reclamation.
In this light, the Riparian owner CANNOT CLAIM the additions to his lands caused by SPECIAL WORKS
EXPRESSLY INTENDED OR DESIGNED TO BRING ABOUT ACCRETION.
67. DIONESIA BAGAIPO VS. COURT OF APPEALS (GR NO. 116290)
FACTS:
Petitioner Bagaipo is the registered owner of Lot No. 415, a 146,900 square meter agricultural land situated
in Ma-a, Davao City under TCT No. T-15757 and bounded on the southeast by the Davao River. Private
respondent Lozano, on the other hand, is the owner of a registered parcel of land located across and
opposite the southeast portion of the petitioner’s lot facing the Davao River. Lozano acquired and occupied
her property in 1962 when his wife inherited the land from her father who died that year.
On May 26, 1989, Bagaipo filed a complaint for Recovery of Possession with Mandatory Writ of Preliminary
Injunction and Damages against Lozano for: (1) the surrender of possession by Lozano of a certain portion
of land measuring 29,162 square meters which is supposedly included in the area belonging to Bagaipo
under TCT No. T-15757; and (2) the recovery of a land area measuring 37,901 square meters which Bagaipo
allegedly lost when the Davao River traversed her property. Bagaipo contended that as a result of a change
in course of the said river, her property became divided into three lots, namely: Lots 415-A, 415-B and 415-
C.
Bagaipo then commissioned a resurvey of Lot 415 and presented before the trial court a survey plan
prepared by Geodetic Engineer Magno. The survey plan allegedly showed that: a) the area presently
occupied by Bagaipo, identified as Lot 415-A, now had an area of only 79,843 square meters; b) Lot 415-B,
with an area measuring 37,901 square meters, which cut across Bagaipo's land was taken up by the new
course of the Davao River; and c) an area of 29,162 square meters designated as Lot 415-C was illegally
occupied by respondent Lozano. The combined area of the lots described in the survey plan tallied with the
technical description of Bagaipo's land under TCT No. T-15757; thus, it was concluded that the land presently
located across the river and parallel to Bagaipo's property still belonged to the latter and not to Lozano, who
planted some 350 fruit-bearing trees on Lot 415-C and the old abandoned river bed.
For his part, Lozano insisted that the land claimed by Bagaipo is actually an accretion to their titled property.
He asserted that the Davao River did not change its course and that the reduction in Bagaipo's domain was
caused by gradual erosion due to the current of the Davao River. Lozano added that it is also because of the
river's natural action that silt slowly deposited and added to his land over a long period of time. He further
averred that this accretion continues up to the present and that registration proceedings instituted by him
over the alluvial formation could not be concluded precisely because it continued to increase in size.
On April 5, 1991, the trial court conducted an ocular inspection and, thereafter, dismissed the complaint
holding that the applicable law in the case is Article 457 and that the reduction in the land area of the

petitioner was caused by erosion and not by change in course of the Davao River. This decision was
subsequently confirmed by the CA.
ISSUE(S):
Whether or not private respondent owned Lot 415-C in accordance with the principle of accretion under
Article 457.
RULING:
The Court held that factual findings of the trial court and of the appellate court, after observation during
ocular inspection conducted by the trial judge, that the decrease in land area was brought about erosion
and not a change in the river’s course, are conclusive unless there are strong and exceptional reasons or
they are unsupported by the evidence on record or the judgment itself is based on a misapprehension of
facts. In the absence of such, the Court held that there is no convincing reason to disregard or disbelieve
such factual findings.
Since the decrease in petitioner's land area and the corresponding expansion of respondent's property were
the combined effect of erosion and accretion respectively, Article 461 of the Civil Code is inapplicable.
Petitioner cannot claim ownership over the old abandoned riverbed because the same is inexistent. The
riverbed's former location cannot even be pinpointed with particularity since the movement of the Davao
River took place gradually over an unspecified period of time, up to the present.
The rule is well-settled that accretion benefits a riparian owner when the following requisites are present:
1) that the deposit be gradual and imperceptible; 2) that it resulted from the effects of the current of the
water; and 3) that the land where accretion takes place is adjacent to the bank of the river. These requisites
were sufficiently proven in favor of respondents. In the absence of evidence that the change in the course
of the river was sudden or that it occurred through avulsion, the presumption is that the change was gradual
and was caused by alluvium and erosion.
As to the petitioner’s assertion that Lot 415-C forms part of her property under TCT No. T-15757, the Court
reiterated the principle held in the case of C.N. Hodges v. Garcia, to wit: “. . . The fact that the accretion to
his land used to pertain to plaintiff's estate, which is covered by a Torrens certificate of title, cannot preclude
him (defendant) from being the owner thereof. Registration does not protect the riparian owner against the
diminution of the area of his land through gradual changes in the course of the adjoining stream. Accretions
which the banks of rivers may gradually receive from the effect of the current become the property of the
owners of the banks (Art. 366 of the old Civil Code; Art. 457 of the new). Such accretions are natural incidents
to land bordering on running streams and the provisions of the Civil Code in that respect are not affected
by the Land Registration Act.”
Petitioner did not demonstrate that Lot 415-C allegedly comprising 29,162 square meters was within the
boundaries of her titled property. The survey plan commissioned by petitioner, which was not approved by
the Director of Lands, was properly discounted by the appellate court. In view of the foregoing, the Court
rendered judgment in favor of the respondent.
68. SPOUSES BAES VS. COURT OF APPEALS AND REPUBLIC (GR NO. 108065)
Facts:

In 1962, the government dug a canal on a private parcel of land covering an area of P33,902 sq.m., to
streamline the Tripa de Gallina creek.
This lot was later acquired by Felix Baes, who registered it in his name. He subdividedit into three lots,
namely: (a) Lot 2958-A, with an area of 28,889 sq.m.; (b) Lot 2958-B, with an area of 3,588 sq.m.; and (c) Lot
2958-C, with an area of 452 sq.m.,
In 1970, in exchange for Lot 2958-B (SECOND LOT), which was totally occupied by the canal, the government
gave Baes a lot with exactly the same area as Lot 2958-B through a Deed of Exchange of Real Property .
Baes had Lot 2958-C and a portion of Lot 2958-A designated as Lot 1, Blk., 4, resurveyed and subdivided
however, it was found out that there were errors in respect of their bearings and distances.
The resurvey-subdivision plan was approved by the Court of First Instance of Pasay City. As a result, the
old TCTs covering the said lots were cancelled and new ones were issued, to wit: (a) Lot 1-A, Blk. 4, with 672
sq. m., under TCT No. T-14404; (b) Lot 1-B, with 826 sq. m., representing the increase in area after the
resurvey, under TCT No. T-14405; (c) Lot 2958-C-1, with 452 sq.m., under TCT No. T-14406; and (d) Lot 2958-
C-2,with 2,770 sq. m. representing the increase after resurvey, under TCT No. T-14407.
Lots 2958-C-1 and 2958-C-2 were later consolidated and this time further subdivided into four (4) lots,
namely, Lot 1, with an area of 147 sq. m.; Lot 2, with an area of 950 sq. m.; Lot 3, with an area of 257 sq. m.;
and Lot 4, with an area of 1,868sq.m., which were respectively issued TCT Nos. 29592, 29593, 29594, and
29595.
The Republic of the Philippines discovered that Lot 1-B (with TCT No. 14405and an area of 826 sq.m.), on
which the petitioners had erected an apartment building, covered Lot 3611 of the Pasay Cadastre, which is
a filled-up portion of the Tripa de Gallina creek.Moreover, Lot 2958-C had been unlawfully enlarged.
Thus, it filed a petition for cancellation of TCT Nos. 14405 and 29592 to29595. Baes did not object in his
answer to the cancellation of TCT 29592, 29594 and 29595and was not able to prove during the trial that
the government utilized a portion of Lot2 under TCT 29593.
The Lower court and court of appeals rendered the TCTs null and void and ordered the Register of deeds
to cancel and issue new ones.
Issues:
Whether or not Baes is the owners of the lot, because of article 461?
Whether or not the owner, Baes, is entitled to compensation?
Held:
The dispute relates to Lot 1-B which the petitioners, relying on Article461 of the Civil Code, are claiming
as their own.
Article 461 of the Civil Code states:
River beds which are abandoned through the natural change in the course of the waters ipso facto belong
to the owners whose lands are occupied by the new course in proportion to the area lost. However, the
owners of the land adjoining the old bed shall have the right to acquire the same by paying the value thereof,
which value shall not exceed the value of the area occupied by the new bed.

A portion of the Tripa de Gallina creek was diverted to a man-made canal which totallyoccupied Lot 2958-B
(with an area of 3,588 sq.m.) belonging to Felix Baes. Thus, the petitioners claim that they became the
owners of the old bed (which was eventually filled up by soil excavated from Lot 2958-B) by virtue of Article
461.
The petitioners rely heavily on Dr. Arturo M. Tolentino's interpretation of this Article, to wit:
This article (461) refers to a natural change in the course of a stream. If the change of the course is due to
works constructed by concessioners authorized by the government, the concession may grant the
abandoned river bed to the concessioners. If there is no such grant, then, by analogy, the abandoned river
bed will belong to the owners of the land covered by the waters, as provided in this article, without prejudice
to a superior right of third persons with sufficient title. (Citing 3 Manresa 251-252; 2 Navarro Amandi, 100-
101; 3 Sanchez Roman 148)
The Court agreed with this interpretation but, as the government avers, the petitioners had already been
fully compensated for it on June 20, 1970 when they agreed to exchange their Lot 2958-B with Lot 3271-A
belonging to the government. This makes the difference as Baes had receive something in exchange thereof.
Thus, with the second issue, Baes is not also entitled for compensation.
If the riparian owner is entitled to compensation for the damage to or loss of his property due to natural
causes, there is all the more reason to compensate him when the change in the course of the river is effected
through artificial means. The loss to the petitioners of the land covered by the canal was the result of a
deliberate act on the part of the government when it sought to improve the flow of the Tripa de Gallina
creek. It was therefore obligated to compensate the Baeses for their loss.
We find, however, that the petitioners have already been so compensated. Felix Baes was given Lot 3271-A
in exchange for the affected Lot 2958-B through the Deed of Exchange of Real Property dated June 20, 1970.
This was a fair exchange because the two lots were of the same area and value and the agreement was
freely entered into by the parties. The petitioners cannot now claim additional compensation because, as
correctly observed by the Solicitor General. Baes cannot claim additional compensation because allowing
Baes to acquire ownership of the dried-up portion of the creek would be a clear case of double
compensation and unjust enrichment at the expense of the state.
69. MARIO RONQUILLO VS. COURT OF APPEALS, ET. AL. (GR NO. 43346)
Facts:
• Rosendo del Rosario was a registered owner of a parcel of land known as Lot 34, Block 9, Sulucan
Subdivision, situated at Sampaloc, Manila and covered by Transfer Certificate of Title No. 34797 of the
Registry of Deeds of Manila. The other plaintiffs Florencia and Amparo del Rosario were daughters of said
Rosendo del Rosario. Adjoining said lot is a dried-up portion of the old Estero Calubcub occupied by the
defendant since 1945 which is the subject matter of the present action.
• .That said property of the plaintiffs abuts and is adjacent to the dried-up river bed of Estero Calubcub,
Sampaloc, Manila;
• After a relocation survey of the land in question sometime in 1960, plaintiffs learned that defendant was
occupying a portion of their land and thus demanded defendant to vacate said land when the latter refused
to pay the reasonable rent for its occupancy. However, despite said demand defendant refused to vacate.
• Defendant on the other hand claims that sometime before 1945 he lived with his sister who was renting
plaintiffs' titled lot. In 1945 he built his house on the disputed dried-up portion of the Estero Calubcub with
a small portion thereof on the titled lot of plaintiffs. Later in 1961, the house was destroyed by a fire and
rebuilt the house this time it was built only on the dried-up portion of the old Estero Calubcub without
touching any part of plaintiffs' titled land. He further claims that said dried-up portion is a land of public
domain.
• That the plaintiffs and defendant have both filed with the Bureau of Lands miscellaneous sales application
for the purchase of the abandoned river bed known as Estero Calubcub and their sales applications, dated
August 5, 1958 and October 13, 1959, respectively, are still pending action before the Bureau of Lands;
• On December 26, 1962, the court rendered judgment ordering the defendant to deliver the said portion
of land which was occupied by him and to pay for rental at the rate of 5.00 per month from the date of filing
until he surrenders and that the Del Rosarios are the owner of the dried-up portion of estero Calubcub.
• On appeal, CA affirmed the decision of the trial court on 25 September 1975 and declared that since Estero
Calubcub had already dried-up way back in 1930 due to the natural change in the course of the waters,
under Article 370 of the old Civil Code which it considers applicable to the present case, the abandoned
river bed belongs to the Del Rosarios as riparian owners. Consequently, respondent court opines, the dried-
up river bed is private land and does not form part of the land of the public domain. It stated further that
even assuming for the sake of argument that said estero did not change its course but merely dried up or
disappeared, said dried-up estero would still belong to the riparian owner, thus upholding its declaration
that the del Rosarios are the rightful owner. Hence, petition for review.
Issue:
WON the del Rosarios are the rightful owner of the dried-up portion of Estero Calubcub
Held:
Art. 370 which states that “The beds of rivers, which are abandoned because of a natural change in the
course of the waters, belong to the owners of the riparian lands throughout the respective length of each.
If the abandoned bed divided tenements belonging to different owners the new dividing line shall be
equidistant from one and the other." Is no longer applicable given after careful perusal of evidence
presented by both parties revealed that the change in the course of Estero Calubcub was caused, not by
natural forces, but due to the dumping of garbage therein by the people of the surrounding neighborhood.
The relocation plan, which also formed the basis of respondent court's ruling, merely reflects the change in
the course of Estero Calubcub but it is not clear therefrom as to what actually brought about such change.
The inescapable conclusion is that the dried-up portion of Estero Calubcub was occasioned, not by a natural
change in the course of the waters, but through the active intervention of man. The rules on alluvion do not
apply to man-made or artificial accretions nor to accretions to lands that adjoin canals or esteros or artificial
drainage systems. Hence, the del Rosarios cannot be entitled as the riparian owners and that dried-up
portion of Estero Calubcub should be considered as public domain which cannot be subject to acquisition
by private ownership.

70. SIARY VALLEY ESTATES, INC. VS. LUCASAN AND HON. JUDGE ORTEGA (OCTOBER 31, 1957)
The Siari Valley Estate Inc. started raising livestock on its 950-hectare ranch, in 1921, with 7 native cattle. In
1923 it acquired 30 native cattle and two Indian bulls. It also introduced native stock into its herd thru a
native black bull. Male offspring of this bull were castrated.
Prior to the Japanese occupation, the fence enclosing plaintiff's pasture was well kept. However in 1943 a
portion thereof was destroyed, with the result that some cattle strayed into the adjoining unfenced range
of defendant Lucasan. And taking advantage of the situation several men in the employ of defendant
willfully and deliverately rounded up and drove many animals from the Siari pasture towards Lucasan's
grazing land.
The defendant, admitted that some cattle of the Siari Valley Estate did enter his ranch. He says however
that thru the good offices of Fiscal Ubay the company rounded up and drove away from his ranch 98 head
of cattle in November 1946; and that in May 1947 plaintiff's herdsmen took away 5 more head of cattle. He
affirmed that as of December 1951 he had 400 head on his ranch all belonging to him, after deducting 200
head which he had disposed of.
After going thru the record, we have no doubt that hundreds of cattle belonging to plaintiff have been
driven, into or wandered into defendant's land. Defendant himself admitted such commixtion although, he
says, plaintiff had already retrieved its animals.
ISSUE: WON Defendant acted in bad faith and WON he is liable
No actual evidence exists that all these missing animals (823) were taken by defendant or his men; but in
view of proof that his men on two occasions drove away more than 30 heads of cattle, it is not erroneous
to believe that the others must have also been driven away on subsequent or prior occasions, applying , by
analogy, the principle that one who stole a part of the stolen money must have taken also the larger sum
lost by the offended party. (People vs. Fernandez, 58 Phil. 674; People vs. Buada, 60 Phil. 363).
“Art. 473. If by the will of only one owner, but in good faith, two things of the same or different kinds are
mixed or confused, the rights of the owners shall be determined by the provisions of the preceding article.
If the one who caused the mixture or confusion acted in bad faith, he shall lose the thing belonging to him
thus mixed or confused, besides being obliged to pay indemnity for the damages caused to the owner of
the other thing with which his own was mixed.”
Did defendant act in bad faith? The circumstances disclosed in this record answer the question in the
affirmative: his cowboys -and even his sons Rafael and Vicente- rounded up and drove plaintiff's cattle into
his pasture; he knew he had plaintiff's cattle, but refused to return them despite demands by plaintiff; he
even threatened plaintiff's men when the latter tried to retrieve its animals; he harassed them with false
prosecutions for their attempts to get back the company's animals; he wouldn't allow plaintiff' s cowboys
to get into his pasture to identify its flock; he rebranded several Siari Valley cattle with his own brand; he
sold cattle without registering the sales; after some cattle impounded were entrusted to his custody as
trustee, he disposed of not less than 5 head of cattle among those he received as such trustee; lastly, he
disposed of much more cattle than he had a right to.
The circumstances disclosed in the record show that defendant acted in bad faith. Under the Civil Code “if
commingling of two things is made in bad faith, the one responsible for it will lose his share…”

71. GALLAR VS. HUSAIN (GR NO. L-20954)
Facts: Husains in this case are the heirs of Teodoro Husain. Teodoro Husain sold the land under dispute for
30 pesos to Serapio Chichirita with the right to repurchase within 6 years. Teodoro transferred his right to
his sister, Graciana Husain. Graciana paid the redemption price and later sold the land to Elias Gallar for a
cattle.
Possession of the land, together with the owner's duplicate of the certificate of title of Teodoro Husain,
was delivered on the same occasion to Gallar, who since then has been in possession of the land. A couple
of years after, Gallar filed this suit in the Court of Instance of Iloilo on October 10, 1960 to compel
Hermenegilda and Bonifacio Husain, as heirs of Teodoro Husain, to execute a deed of conveyance in his
favor so that he could get a transfer certificate of title. He also asked for damages. The Husains countered
by saying that Graciana already paid the redemption price thus their father had already reacquired
ownership over the same. They also claim that the action of Elias has already PRESCRIBED.
ISSUE:
1) Whether or not ownership was transferred to Gallar?
2) Whether or not the action has already prescribed?
RULING:
1) YES, ownership has been transferred to Gallar. The right of repurchase may be exercised only by
the vendor in whom the right is recognized by contract or by any person to whom the right may have been
transferred. Graciana Husain must, therefore, be deemed to have acquired the land in her own right, subject
only to Teodoro Husain's right of redemption. As the new owner she had a perfect right to dispose of the
land as she in fact did when she exchanged it for a cattle with Gallar.
2) NO, the action is imprescriptible. This action is not for specific performance; all it seeks is to quiet
title, to remove the cloud cast on appellee's ownership as a result of appellant's refusal to recognize the
sale made by their predecessor. And, as plaintiff-appellee is in possession of the land, the action is
imprescriptible. Appellant's argument that the action has prescribed would be correct if they were in
possession as the action to quiet title would then be an action for recovery of real property which must be
brought within the statutory period of limitation governing such actions.
72. CORONEL VS. INTERMEDIATE APPELLATE COURT (GR NO. L-70191)
Facts: The lot involved in this case is the 2/8 share of the NAIC ESTATE of Bernabela Lontoc which was
subdivided into 3 portions: 1/3, Bernardino Merlan (Grandson), 1/3, Jose and Brigido Merlan (defendants),
1/3, Daniel and Paz Anuat (grandchildren). Sometime in 1950, the 2/3 share of BERNARDINO and
DANIEL&PAZ ‘s undivided portion of BERNABELA of the NAIC ESTATE was sold to IGNACIO MANALO became
Lot 1950 which was later subdivided and became Lot 1950-A containing 12, 189 sq. m. IGNACIO
subsequently sold it (Lot 1950-A) to MARIANO MANALO. The OCT issued in favor of MARIANO did not
mention of the 1/3 share of the defendants (JOSE and BRIGIDO) which was NOT sold to them because what
was sold was merely 2/3 (BERNARDINO and D& P). Petitioner (CORONEL) subsequently bought Lot. 1950-A
from MARIANO and it became T-75543. What is clear is that respondents never sold their 1/3 portion over
Lot 1950-A of the NAIC Estate. There was a mistake when TCT 75543 was issued to Mariano because such
covered the entire Lot 1950-A. Respondents was in peaceful possession of said land even before first sale
in 1950 until 1975 when the complaint was filed against them. Petitioner contends respondents are barred
by prescription since 25 years has already elapsed when registration of Lot. 1950-A took place and further
claims that annulment should have been brought within 4 years. Petitioner further alleges he was purchaser
in good faith.
Issue: (1)WON respondents are barred by prescription.
(2) The Issue of Good Faith.
Held: (1) Respondents are not barred by prescription. The facts of the case show that the private
respondents have always been in peaceful possession of the 1/3 portion of the subject lot, exercising
ownership thereto for more than 25 years disrupted only in 1975. It was only at that time that the statutory
period of prescription may be said to have commenced to run against them. It was only at this point that
private respondents knew about the supposed sale of their 1/3 portion of Lot 1950-A of the Naic Estate and
they immediately resisted.
(2) SC said, “this notwithstanding we cannot close our eyes to the fact that neither the private respondents
nor their co-owners of the subject parcel of land sold the former's share of the lot.” Further, “The point is
that the 1/3 undivided portion of the private respondents over Lot No. 1950-A was mistakenly included in
the transfer certificate of title of Mariano Manalo.” The SC claimed that there is a countervailing doctrine
which militates against the harshness of the iron-clad doctrine of giving full faith and credit to a Torrens title
and that is FAIRNESS and EQUITY. Moreover, it said, simple possession of a certificate of title, under the
Torrens System, does not necessarily make the possessor a true owner of all the property described
therein.”
Final note: The 1/3 portion of the land was segregated to JOSE and BRIGIDO and was issued a new OCT and
the 2/3 to said petitioner was also issued a new OCT after cancelling T-75543.
73. CARAGAY-LAYNO VS. COURT OF APPEALS (GR NO. 52064)
FACTS:
The disputed portion, as established by a relocation survey, is a 3,732 square meter area of a bigger parcel
of sugar and coconut land (with a total area of 8,752 square meters) situated in Calasiao, Pangasinan. The
entire parcel is covered by OCT No. 63, which includes the adjoining Lots 2 and 3, issued on September 11,
1947 in the name of Mariano M. De Vera. The latter died in 1951, without issue, and his intestate estate
was administered by his widow then by her nephew, private respondent Estrada.
Petitioner Caragay and the decedent De Vera were first cousins and were both orphans, who lived together
under one roof in the care of a common aunt. As Administratrix, De Vera's widow filed with the former
Court of First Instance of Pangasinan, an Inventory of all properties of the deceased, which included a parcel
of land in Calasiao, Pangasinan, containing an area of more or less 5,417 square meters, and covered by Tax
Declaration No. 12664.
Because of the discrepancy in area mentioned in the Inventory as 5,147 square meters and that in the title
as 8,752 square meters, private respondent Estrada repaired to the Disputed Property and found that the
northwestern portion, subsequently surveyed to be 3,732 square meters, was occupied by petitioner
spouses. Private respondent demanded that they vacate the Disputed Portion since it was titled in the name
of the deceased De Vera, but petitioners refused claiming that the land belonged to them and, before them,
to Juliana Caragay's, father Juan Caragay.
Private respondent then instituted suit against petitioner for the recovery of the Disputed Portion. The latter
resisted, mainly on the ground that the Disputed Portion had been fraudulently or mistakenly included in
OCT No. 63, so that an implied or constructive trust existed in her favor. Petitioner then counterclaimed for
reconveyance of property in the sense that title be issued in her favor.
After hearing, the Trial Court rendered judgment ordering petitioner to vacate the Disputed Portion. This
was subsequently affirmed by the respondent Appellate Court, which held that the petitioner’s claim for
reconveyance based on implied or constructive trust has prescribed after ten years from the date when De
Vera’s land was registered on September 11, 1947 since it was only on March 28, 1967 when the petitioner
sought for the reconveyance of the property.
ISSUE(S):
Whether or not the CA was correct in rendering judgment in favor of the respondent.
RULING:
The Court held in the negative.
The evidence discloses that the Disputed Portion was originally possessed openly, continuously and
uninterruptedly in the concept of an owner by Juan Caragay, the deceased father of the petitioner, and had
been declared in his name under tax declarations since 1921. Upon the demise of the petitioner’s father in
1914, petitioner adjudicated the property to herself as his sole heir in 1968 and declared it in her name
under tax declarations since 1959. Realty taxes were also religiously paid from 1938 to 1972. Taking the
previous possession of petitioner’s father to her own, they had been in actual, open, continuous and
uninterrupted possession in the concept of owner for about forty five (45) years, until said possession was
disturbed in 1966 when the private respondent Estrada informed petitioner that the Disputed Portion was
registered in Mariano De Vera's name.
To substantiate her claim of fraud in the inclusion of the Disputed Portion in OCT No. 68, the petitioner
declared that Mariano De Vera, during his lifetime, borrowed from the former, the tax declaration of her
land purportedly to be used as collateral for the latter’s loan and sugar quota application. Relying on De
Vera's assurances, petitioner acceded to the request and was made to sign some documents, the contents
of which was unknown to her because of her ignorance and that she discovered the fraudulent inclusion of
the Disputed Portion in OCT No. 63 only in 1966 when Estrada sought to eject them.
The Court made significance of the fact, as disclosed by the evidence, that for twenty years from the date
of registration of title in 1947 up to 1967 when this suit for recovery of possession was instituted, neither
the deceased De Vera, up to the time of his death in 1951, nor his successors-in-interest, had taken steps to
possess or lay adverse claim to the Disputed Portion. They may, therefore be said to be guilty of laches as
would effectively derail their cause of action. Administrator Estrada tackles interest in recovering the said
portion only when he noticed the discrepancy in areas in the Inventory of Property and in the title. In view
of such fact and that petitioner had been in actual, continuous and open possession thereof to the exclusion
of all, the inescapable inference is, fraud having been unsubstantiated, that it had been erroneously

included in OCT No. 63. The mistake is confirmed by the fact that deducting 3,732 square meters (the area
of the Disputed Portion) from 8,752 square meters (the area of Lot 1 in OCT No. 63), the difference is 5,020
square meters, which closely approximates the area of 5,147 square meters, indicated in the Inventory of
Property of De Vera.
The Court held that such conclusion does not necessarily wreak havoc on the indefeasibility of a Torrens
title. For mere possession of a certificate of title under the Torrens System is not conclusive as to the holder's
true ownership of all the property described therein as he does not, by virtue of said certificate alone,
become the owner of the land illegally included. Thus, petitioner, whose property had been wrongfully
registered in the name of another, but which had not yet passed into the hands of third parties, can properly
seek its reconveyance.
It was further held that prescription cannot be invoked against the petitioner for the reason that as lawful
possessor and owner of the Disputed Portion, her cause of action for reconveyance which, in effect, seeks
to quiet title to the property, falls within settled jurisprudence that an action to quiet title to property in
one's possession is imprescriptible. Her undisturbed possession over a period of fifty two years gave her a
continuing right to seek the aid of a Court of equity to determine the nature of the adverse claim of a third
party and the effect on her own title. Besides, under the circumstances, petitioner's right to quiet title, to
seek reconveyance, and to annul OCT. No. 63 accused only in 1966 when she was made aware of a claim
adverse to her own. It was only then that the statutory period of prescription may be said to have
commenced to run against her, following the pronouncement in Faja v. Court of Appeals, to wit: “There is
settled jurisprudence that one who is in actual possession of a piece of land claiming to be owner thereof
may wait until his possession is disturbed or his title is attacked before taking steps to vindicate his right,
the reason for the rule being, that his undisturbed possession gives him a continuing right to seek the aid of
a court of equity to ascertain and determine the nature of the adverse claim of third party and its effect on
his own title, which right can be claimed only by one who is in possession.”
74. ANASTACIA VDA. DE AVILES, ET. AL. VS. COURT OF APPEALS AND CAMILO AVILES ( GR. NO. 95748)
Facts:
Eduardo Aviles, the predecessor of the petitioners is the bother of defendant Camilo. They inherited their
lands from their parents and have agreed to subdivide the same amongst themselves. The area allotted to
Eduardo Aviles is 16,111 square meters more or less, to Anastacio Aviles is 16,214 square meters more or
less, while the area alloted to defendant Camilo Aviles is 14,470 square meters more or less.
Defendant’s land composed of the rice land portion of his land is 13,290 square meters, the fishpond portion
is 500 square meters and the residential portion is 680 square meters, or a total of 14,470 square meters.
The Petitioners claim that they are the owners of the fish pond which they claim is within their area.
Defendant Camilo Aviles asserted a color of title over the northern portion of the property with an area of
approximately 1,200 square meters by constructing a bamboo fence and moving the earthen dikes, thereby
molesting and disturbing the peaceful possession of the plaintiffs over said portion.
Petitioners say that the fences were created to unduly encroach to their property but the defendant said
that he merely reconstructed the same.
Petitioners brought an action to quiet title but were denied thus this case.

Issue:
Whether or not petitioners filed the right action
Ruling:
No, Petitioners filed the wrong action. This is obviously a boundary dispute and as such the action must fail.
Art. 476. Whenever there is a cloud on title to real property or any interest therein, by reason of any
instrument, record, claim, encumbrance or proceeding which is apparently valid or effective but is, in truth
and in fact, invalid, ineffective, voidable, or unenforceable, and may be prejudicial to said title, an action
may be brought to remove such cloud or to quiet the title.
An action may also be brought to prevent a cloud from being cast upon a title to real property or any interest
therein.
Petitioners fail to point out any instrument, record, claim, encumbrance or proceeding that could been a
“cloud” to their title. In fact, both plaintiffs and defendant admitted the existence of the agreement of
partition dated June 8, 1957 and in accordance therewith, a fixed area was allotted to them and that the
only controversy is whether these lands were properly measured.
A special civil action for quieting of title is not the proper remedy for settling a boundary dispute, and that
petitioners should have instituted an ejectment suit instead. An action for forcible entry, whenever
warranted by the period prescribed in Rule 70, or for recovery of possession de facto, also within the
prescribed period, may be availed of by the petitioners, in which proceeding the boundary dispute may be
fully threshed out.
75. AZNAR BROTHERS REALTY COMPANY VS. AYING (458 SCRA 495)
FACTS:
The disputed property is Lot No. 4399 with an area of 34,325 square meters, to which Crisanta Maloloy-on
petitioned for the issuance of a cadastral decree in her favor. After her death in 1930, the Cadastral Court
issued a Decision directing the issuance of a decree in the name of her eight children, namely: Juan,
Celedonio, Emiliano, Francisco, Simeon, Bernabe, Roberta and Fausta, all surnamed Aying. The certificate
of title was, however, lost during the war.
Subsequently, all the heirs of the Aying siblings conveyed the subject parcel of land to petitioner Aznar
Brothers Realty Company by executed an Extra-Judicial Partition of Real Estate with Deed of Absolute Sale
dated March 3, 1964, which was registered with the Register of Deeds on March 6, 1964 under Act No.
3344. Since then, the petitioner had been religiously paying real property taxes on said property.
In 1988, petitioner filed a Petition for Reconstitution of the Original Title. This was granted by the Court on
April 12, 1988 in its decision directing the Register of Deeds to issue a reconstituted title in the name of the
abovementioned Aying siblings. Consequently, OCT No. RO-2856 was issued.
Petitioner, claiming to be the rightful owner of the subject property, sent out in 1991 notices to vacate,
addressed to persons occupying the property. Unheeded, the petitioner then filed a complaint for ejectment
against the occupants before the MTC. On February 1, 1994, the MTC ordered the occupants to vacate the

property. The case eventually reached this Court, which promulgated on March 7, 2000,a decision in favor
of herein petitioner, declaring it as the rightful possessor of the parcel of land in question.
Meanwhile, herein respondents, along with other persons claiming to be descendants of the eight Aying
siblings, totaling approximately 220 persons, filed a complaint for cancellation of the Extra-Judicial Partition
with Absolute Sale, recovery of ownership, injunction and damages with the RTC. However, the complaint
was dismissed twice without prejudice. In their amended complaint, herein respondents allege among
others: (1) that they are co-owners of subject property, being descendants of the registered owners thereof
under OCT No. RO-2856; (2) that they had been in actual, peaceful, physical, open, adverse, continuous and
uninterrupted possession in concept of owner of subject parcel of land since time immemorial; and (3) that
the extra-judicial partition of real estate with deed of absolute sale, entered into by the petitioner, is a fraud
and is null and void ab initio because not all the co-owners of subject property affixed their signature on
said document and some of the co-owners who supposedly signed said document had been dead at the
time of the execution thereof.
Petitioner, in its answer, denied that respondents are the lawful owners of subject parcel of land by virtue
of their being descendants or heirs of the registered owners of subject property. Instead, petitioner alleged
that it had been in actual possession of subject land as owner thereof by virtue of the extra-judicial partition
of real property and deed of absolute sale executed in its favor; and that in fact, it had been paying taxes
thereon religiously. Petitioner then raised the affirmative defenses of failure to state cause of action and
prescription, as it took respondents 27 years, 10 months and 27 days to file the action to recover subject
property, when an action to recover property based on an implied trust should be instituted within 4 years
from discovery of the fraud.
On July 4, 1997, the RTC rendered a Decision ruling that respondents' evidence failed to prove that the
extra-judicial partition with deed of absolute sale was a totally simulated or fictitious contract and concluded
that said document is valid, thus, effectively conveying to petitioner the property in question. It further held
that respondents' action, being considered as one for reconveyance based on implied or constructive trust,
had prescribed in 10 years from the registration of the deed on March 6, 1964; and if the action is considered
as one for annulment of contract on the ground of fraud, it should have been filed within 4 years from
discovery of the fraud. The trial court also ruled that respondents failed to present any admissible proof of
filiation, hence, they were not able to prove that they are indeed heirs of the eight Aying siblings who appear
as the registered owners under OCT No. RO-2856.
Upon appeal, the CA affirmed and modified the RTC’s decision and held that the heirs of Emiliano Aying,
Simeon Aying and Roberta Aying are hereby declared as the lawful owners of the contested property but
equivalent only to 3/8. The CA held that "an action for recovery of possession of registered land never
prescribes in view of the provision of Section 44, Act No. 496 (now Sec. 47, PD 1520), to the effect that no
title to registered land in derogation to that of a registered owner shall be acquired by prescription." Even
if the action is deemed to be based on implied trust, prescription did not begin to run since there is no
evidence that positive acts of repudiation were made known to the heirs who did not participate in the
execution of the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale. Thus, striking down the
RTC's ruling that the respondents' complaint is dismissible on the ground of prescription, the CA held instead
that herein respondents' action had not prescribed but upheld the validity of the Extra-Judicial Partition of

Real Estate with Deed of Absolute Sale, except as to the shares of the heirs of Emiliano, Simeon and Roberta,
who did not participate in the execution of said document.
ISSUE(S):
1. Whether or not the respondent’s cause of action is imprescriptible.
2. If the action is indeed imprescriptible, whether or not the principle of laches apply.
RULING:
The Court held that the RTC and the CA that were correct in ruling that the Extra-Judicial Partition of Real
Estate with Deed of Absolute Sale is valid and binding only as to the heirs who participated in the execution
thereof, hence, the heirs of Emiliano, Simeon and Roberta Aying, who undisputedly did not participate
therein, cannot be bound by said document.
The Court emphasized the facts shown on record show that petitioner acquired the entire parcel of land
with the mistaken belief that all the heirs have executed the subject document. Thus, it was correct for the
trial court to apply Article 1456 of the Civil Code, which states that “If property is acquired through mistake
or fraud, the person obtaining it is, by force of law, considered a trustee of an implied trust for the benefit
of the person from whom the property comes.”
The concept of constructive trusts was discussed in Philippine National Bank v. Court of Appeals, to wit: “xxx
On the other hand, constructive trusts are created by the construction of equity in order to satisfy the
demands of justice and prevent unjust enrichment. They arise contrary to intention against one who, by
fraud, duress or abuse of confidence, obtains or holds the legal right to property which he ought not, in
equity and good conscience, to hold.”
Based on such concept of constructive trusts, the Court ruled in said case that: “The rule that a trustee
cannot acquire by prescription ownership over property entrusted to him until and unless he repudiates the
trust, applies to express trusts and resulting implied trusts. However, in constructive implied trusts,
prescription may supervene even if the trustee does not repudiate the relationship. Necessarily, repudiation
of said trust is not a condition precedent to the running of the prescriptive period.”
In Amerol v. Bagumbaran, the Court held that as to the prescriptive period within which to bring an action
for reconveyance of property based on implied or constructive trust, Article 1144 of the Civil Code is
applicable, to wit: “The following actions must be brought within ten years from the time the right of action
accrues - (1) Upon a written contract; (2) Upon an obligation created by law; (3) Upon a judgment.”
An action for reconveyance based on an implied or constructive trust must perforce prescribe in ten years
and not otherwise. Undoubtedly, it is now well-settled that an action for reconveyance based on an implied
or constructive trust prescribes in ten years from the issuance of the Torrens title over the property. It has
also been ruled that the ten-year prescriptive period begins to run from the date of registration of the deed
or the date of the issuance of the certificate of title over the property, but if the person claiming to be the
owner thereof is in actual possession of the property, the right to seek reconveyance, which in effect seeks
to quiet title to the property, does not prescribe.

In ruling that the prescriptive period applies to the respondents, the Court made notice of the fact that the
respondents in the present case all testified that they have never occupied or been in possession of the land
in dispute. As to the period from which prescription will start to run, the Court held that since the Extra-
Judicial Partition of Real Estate with Deed of Absolute Sale was registered under Act No. 3344 and not under
Act No. 496, said document is deemed not registered. Accordingly, the ten-year prescriptive period cannot
be reckoned from March 6, 1964, the date of registration of the subject document under Act No. 3344. The
prescriptive period only began to run from the time respondents had actual notice of the Extra-Judicial
Partition of Real Estate with Deed of Absolute Sale.
Respondents filed their Amended Complaint on December 6, 1993. 24 Thus, with regard to respondent heirs
of Roberta Aying who had knowledge of the conveyance as far back as 1967, their cause of action is already
barred by prescription when said amended complaint was filed as they only had until 1977 within which to
bring action. As to the respondent heirs of Emiliano and Simeon Aying, they were able to initiate their action
for reconveyance of property based on implied or constructive trust well within the ten-year prescriptive
period reckoned from 1991 when they were sent by petitioner a notice to vacate the subject property.
Evidently, laches cannot be applied against respondent heirs of Emiliano and Simeon Aying, as they took
action to protect their interest well within the period accorded them by law.

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Table of Contents

1. LEUNG YEE VS. STRONG MACHINERY (37 PHIL 644) ........................................................................................3

1 PROPERTY - CASE DIGESTS

2 PROPERTY - CASE DIGESTS

1. LEUNG YEE VS. STRONG MACHINERY (37 PHIL 644)

3 PROPERTY - CASE DIGESTS

5 PROPERTY - CASE DIGESTS

6 PROPERTY - CASE DIGESTS

8 PROPERTY - CASE DIGESTS

9 PROPERTY - CASE DIGESTS

10 PROPERTY - CASE DIGESTS

12 PROPERTY - CASE DIGESTS

14 PROPERTY - CASE DIGESTS

16 PROPERTY - CASE DIGESTS

17 PROPERTY - CASE DIGESTS

19 PROPERTY - CASE DIGESTS

17. IGNACIO VS. DIRECTOR OF LANDS (108 PHIL 335)

21 PROPERTY - CASE DIGESTS

22 PROPERTY - CASE DIGESTS

24 PROPERTY - CASE DIGESTS

26 PROPERTY - CASE DIGESTS

27 PROPERTY - CASE DIGESTS

1.MIAA is Not a Government-Owned or Controlled Corporation

2. Airport Lands and Buildings of MIAA are Owned by the Republic

b. Airport Lands and Buildings are Outside the Commerce of Man

29 PROPERTY - CASE DIGESTS

c. MIAA is a Mere Trustee of the Republic

30 PROPERTY - CASE DIGESTS

32 PROPERTY - CASE DIGESTS

33 PROPERTY - CASE DIGESTS

35 PROPERTY - CASE DIGESTS

36 PROPERTY - CASE DIGESTS

24. PRA vs. City of Paranaque (191109)

PRA asserted that:

City of Parañaque (respondent) argued that:

38 PROPERTY - CASE DIGESTS

25. Jean Tan vs. RP (193443)

23. IDEALS VS. PSALM (GR NO. 192088)

MWSS (respondent, but seems to side with P)

Operation of a Hydroelectric Power Plant

41 PROPERTY - CASE DIGESTS

42 PROPERTY - CASE DIGESTS

43 PROPERTY - CASE DIGESTS

44 PROPERTY - CASE DIGESTS

C. Revocation of a Mandatory Donation Because of Non-compliance with an illegal condition

45 PROPERTY - CASE DIGESTS

46 PROPERTY - CASE DIGESTS

48 PROPERTY - CASE DIGESTS

52 PROPERTY - CASE DIGESTS

53 PROPERTY - CASE DIGESTS

54 PROPERTY - CASE DIGESTS

56 PROPERTY - CASE DIGESTS

58 PROPERTY - CASE DIGESTS

59 PROPERTY - CASE DIGESTS

60 PROPERTY - CASE DIGESTS

What evidence can you show to prove it is patrimonial?

By showing that it is purchased from the proprietary funds of the LGU.

61 PROPERTY - CASE DIGESTS

63 PROPERTY - CASE DIGESTS

65 PROPERTY - CASE DIGESTS

ISSUE: Whether or not PNB may be sued.

66 PROPERTY - CASE DIGESTS